Fast food and retail group Innscor Africa is optimistic that dependable, pro-business measures and policies will be implemented by authorities, resulting in encouraging additional expansion investment into domestic manufacturing ventures.
Of late, a lack of investment has been attributed to a lack of investor confidence, largely emanating from the government’s policy inconsistencies. Like any other business, the group was not spared from the impact of Russia and Ukraine as resultant implications were felt across international commodity markets and inbound supply chains.
For the upcoming fiscal year, group chairman Addington Chinake said, additional investments totalling US$56 million are also anticipated.
“As highlighted earlier in this statement, the 2023 financial year will see a considerable number of these projects being commissioned across the Group, enabling production capacity increases, adding new product categories, significantly improving product quality and further enhancing production efficiencies; all enabled via the introduction of world-class technologies and plant automation,” he said.
In 2021, the group began an ambitious US$70 million investment initiative.
“Given its size and the nature of the manufacturing cycle, the Group is reliant on both shareholders’ equity and debt funding which it deploys, collectively, in the considerable working capital pipelines it needs to establish in order to ensure consistent supply of product to the market, and to ensure that its vast capital maintenance and expansion projects can be executed on.”
From a business model standpoint, he said recent monetary policy interventions have made “local debt financing unprofitable,” which has significantly increased the group’s cost of capital.
“As a result, the group has taken firm action to re-arrange its debt facilities as well as revise its working capital strategies in order to adapt to current market conditions; this will remain a key area of focus in the short to medium term,” he said.
”The group remains hopeful that consistent, probusiness measures and policies will be employed, which in turn will encourage further expansion investment into local manufacturing initiatives, reduce the country’s reliance on imported goods in the long-term, and result in increased local job creation.”
While the current economic situation is still complicated and difficult, the group is optimistic about the chances for macroeconomic development and a medium-term economic recovery.
“Our management teams will continue to adapt and optimise business trading models, with focus being directed to balancing pricing and volume objectives, achieving appropriate levels of margin return, ensuring that overheads are contained, creating bespoke working capital solutions relevant to current market conditions, and, most importantly, ensuring maximum free cash generation,” said Chinake.
For the year ended 30 June 2022, the group registered positive and extremely pleasing volume growth across all core businesses versus the comparative year. This was attributed to a sustained focus on diversifying and expanding product portfolios, implementing affordable pricing policies, and employing efficient route-to-market strategies; all of which were further supported by ongoing investment into enhanced manufacturing capacity and capabilities.
Over the course of the year, Chinake said inflation-related distortions increased in frequency, as seen by the sharp rise in profit margins.
It declared a final dividend of US$1.56 cents per shar – Harare