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
Number of new restaurants Americana opened up to 9M-2023 and with a further 92 new restaurants under constructionSlower 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.
