Innscor resolutions passed unanimously

Innscor resolutions passed unanimously
Published: 25 November 2013
At the company's 17th AGM held on Friday 22 November 2013, all resolutions tabled were passed unanimously.

In a trading update, management reported that turnover for Q1 2014 increased by 5% y-o-y. Margins in the Fast Food division were under pressure mainly because of aggressive pricing in terms of increased promotional activity in a bid to attract more customers.

The promotions resulted in a 7% growth in foot traffic, however, profitability declined by 30%. The regional Fast Foods recorded a satisfactory performance with a 5% increase in turnover.

The group opened four new counters in Kenya and an additional four counters in DRC, Lubumbashi. Innscor plans to open a further 17 counters across the region in the second quarter.

The credit retail business, TV Sales and Home has been their star performer recording a 30% increase in turnover. The debtor's book is in good shape with less than 1% in arrears.

The Distribution Group in Zimbabwe performed well on the back of a competitive background, increasing its market share. However, Zambia and Malawi activities declined by 9%, the decline in Malawi was mainly because of foreign currency challenges while that in Zambia is attributed to increased competition.

Irvines had an impressive first quarter recording a 23% increase in turnover driven by day old chicks and frozen poultry sales. Colcom had a tough first quarter mainly due to stiff competition and liquidity challenges.

National Foods also had a tight first quarter due to cheap imports coming from South Africa. The company recorded a 2% increase in volumes. Capri had a dismal first quarter as it suffered from cheap imports from South Africa.

Overall profits were down 19% for the quarter. Although we note that the group's busiest period is usually in the second quarter a significant recovery is unlikely due to weak demand.

In a research note, Imara Edwards Stockbrokers analyst Kudakwashe Mundowozi said, "In our view, local consumer spending remains under pressure given the low disposal incomes. Furthermore, there is increasing competition especially from imports as well as new entrants. Margins are likely to remain under pressure. Profitability for FY 14 is unlikely to be exciting."

Mundowozi downgraded Innscor Africa from a buy to a sell.
- businessdaily
Tags: Innscor, AGM,

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