Famous Brands reported an 18 percent increase in operating profit to R938m for the year to end February.Photo: Simphiwe Mbokazi
Durban - Restaurant and fast food chain Famous Brands has decided to focus its long-term view on UK investments rather than short-term results.

The group said it opted for the view following indications that the UK economy had recovered from the Brexit fears.

Famous Brands chief executive Darren Hele said the group remained optimistic about its investments in the country.

“The UK economy has been holding up well since February and we are hopeful about the future, despite Brexit,” Hele said.

“As the company we have taken a long-term view by investing there. UK has a solid economy and is a First World country, so we are confident the acquisition will show good returns in the future.”

The group bought UK Gourmet Burger Kitchen (GBK) for £120 million (R2 billion) in October last year, saying the acquisition was significant in furthering its goal to diversify earnings and expand its geographical footprint.

The group reported an 18 percent increase in operating profit to R938 million for the year to end February, saying it was looking for more opportunities in foreign markets for diversification.

The UK business also increased profits in the 20-week period contributing £35 million in revenue and £2 million in operating profit to the group’s Brands division results.

“We have made quite a number of acquisitions during the financial year and we are very pleased and encouraged by their contribution in these results. Even though we don’t think we are going to make many acquisitions this year, we will continue to be on the look-out should anything of substance arise,” added Hele.

Famous Brands made seven acquisitions in 2016 with GBK their largest acquisition to date. Other purchases included 51 percent of Salsa Mexican Grill and Lupa Osteria as well as a 49.9 percent stake in commercial catering company, By Word of Mouth and 100 percent of Lamberts Bay Foods, a manufacturer of French fries and other potato products.

During the period the group saw its revenue increasing by 33 percent to R5.7 billion, up from R4.3 billion, while operating profit before non-operational items increased 18 percent to R938 million, up from R792 million as compared to 2016.

Hele added strong organic growth was reported by the Brands, Logistics and Manufacturing operations. Brands in the Famous Brands portfolio include Debonairs Pizza, Steers, Fishaways and Milky Lane, Tashas, Turn ’n Tender, NetCafé, Coffee Couture and Thrupps.

Famous Brands operates in different regions in Africa, the Middle East and the UK.

In South Africa revenue increased 15 percent to R781 million while operating profit rose by 10 percent to R427 million.

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The Middle East operation also recorded solid growth with combined revenue up by 71.7 percent to R249 million with operating profit rising by 47 percent to R50 million.

Wimpy UK business reported a marginal decline in revenue in pounds. Revenue in rand terms decreased to R105 million, down from R116 million during the period.

The group’s supply chain division comprises its logistics and manufacturing businesses which are managed and measured separately. Consolidated revenue increased 18 percent to R4 billion while operating profit rose 31 percent to R455 million.

Revenue in the logistics unit increased 17 percent to R3.4 billion with operating profit improving 24 percent to R125 million. In the manufacturing division, revenue was up by 28 percent to R2.3 billion while operating profit gained 33 percent to R330 million, attributable to continued improvements across the operation. The group decided not to pay a dividend. It said payment of dividends will resume in the 2018 financial year.

Famous Brands shares rose 1.91 percent on the JSE to close at R127.90.