Profits down 38.8% for Middle East F&B giant Americana Restaurants

Dubai: The 2024 net profits for the Middle East’s biggest F&B operator, Americana Restaurants, were down 38.8% to $158.8 million. The region’s Pizza Hut and KFC franchisee said the bottom-line was affected by higher depreciation costs from new outlets opening and also from the UAE’s new corporate tax regime.

Revenues came to $2.19 billion, down 9% from a year ago.

The company, listed on ADX and Saudi Tadawul, however pointed to gross profit margins remaining ‘robust’, and ‘supported by favorable commodity prices and effective procurement and revenue management strategies’.

The Americana Restaurants’ Board of Directors plans to issue a cash dividend of $127 million (which is $0.01512 per share).

It has been a fairly difficult trading environment for the wider F&B industry, with geopolitics - the Gaza crisis - being an issue affecting consumer spending in some of the regional markets.

During 2024, the company opened 213 gross new stores and which took the overall network size to 2,590 restaurants in operation by end December. (This year, it bought the Pizza Hut franchise in Oman.)

On the plus side, Americana Restaurants points to a 'robust balance-sheet with zero leverage and a solid cash position. This, the company says, shows 'prudent financial management and operational efficiency'.

In 2024, the adjusted free cash flow was $94.8 million and with a cash conversion rate of 34.8%.

On prospects for 2025, the company cites tax as a factor that will weigh on its numbers. "Profitability is anticipated to be impacted by the introduction of corporate tax in key markets," it added.

"The focus will remain on recovering transactions and growing the average check (consumer spend). Committed to strategic expansion and deeper market penetration, the company plans to strengthen its market presence."

Americana Restaurants did see something of a growth boost during the final three months of 2024. when it achieved 14.1% year-on-year growth in revenue and 26.3% gain in net income attributable to parent shareholders.

This is indicative of 'progress in its business recovery'.

Excluding a $3.8 million one-off charge in Q4-2023 and $12.6 million impairment charges in Q4-2024, net income actually increased 47.6% year-on-year.