Middle East's F&B giant Americana delivers solid performance with net profit of $226.7m
ADX- and Tadawul-listed firm says it's on track to deliver on dividend policy
Dubai: The Middle East’s biggest restaurant operator Americana pulled out a solid 7.1 per cent increase in revenues for January to end September, totalling $1.89 billion. That was enough to power up a $226.7 million net profit for the period, up 15.8 per cent from $195.8 million.
All of which sets up Americana – dual listed on ADX and Saudi Tadawul and operator of KFC, Pizza Hut and Hardee's franchises among others – to cover short-term ‘capex requirements as well as to support its dividend policy’. The company’s adjusted free cash flow ended September with $195 million and a cash conversion ratio of 66.3 per cent.
“The company expects to continue its expansion plan and add 250-260 net new restaurants during 2023, across its markets of operations with particular focus on Saudi Arabia,” said a statement. “The company also looks to expand profit margins on account of improved operational efficiencies and normalizing commodity prices.
“While recent geopolitical developments may have some impact on short-term performance, the company remains positive about the general business environment and its outlook for long term performance.”
Americana Restaurants - which went for its IPO last 20222 - had 2,338 restaurants as of September last.
On ADX, the stock shed 1.89 per cent on November 1 to Dh3.63.
Food prices
Another welcome break for Americana in the recent quarter was the steady decline in food staple prices from their 2022-early 2023 peaks. The company gives a nod to these outcomes by noting the decrease in 'commodity inflation' and a 'continued focus on operational efficiencies'. (Food inflation along with the rental spikes on restaurant locations had been an issue for F&B operators across the board for 2 years.)
The 9M-23 revenue-side growth was also helped along by 'continuing like-for-like' gains and more location additions to its restaurant portfolio across the Middle East, North Africa and Kazakhstan. (Market sources confirm that spending across the UAE and Gulf's F&B outlets had been on the increase since the start of the year.)
184
Slower returns from Lebanon, Egypt
Macro factors had their say in pulling back net profit growth higher for the nine-month run. There was the negative impact from accounting for hyperinflation at its Lebanon business operations as well as the currency devaluation in Egypt of around $10 million compared to same period last year.
The overall net profit was driven by 'business growth and improved operational efficiency' and the fact that there had been a one-off tax claim charge in Egypt of $24.9 million during the same period in 2022.