Famous Brands’ SADC revenue falls 18%

CHAMWE KAIRA

The Southern African Development Community (SADC) division of South African restaurant group Famous Brands recorded an 18% decline in revenue to N$183 million for the six months ended 31 August 2026, with weak trading in Botswana weighing on regional performance, including operations in Namibia.

It manages iconic food chains like Steers, Debonairs Pizza, Wimpy, Mugg & Bean, Fishaways, and Milky Lane.

Operating profit in the region plunged by 78% to N$5 million from N$24 million in the corresponding period last year, as the group struggled to offset declining sales in Botswana despite revenue growth in several other markets.

Famous Brands, which operates restaurant franchises across Namibia and other SADC countries, said Botswana’s system-wide restaurant sales fell by 14.8%, while like-for-like sales declined by 13.5% compared with the previous period.

The company attributed the weakness to a subdued economic environment driven by pressure in Botswana’s diamond sector, which continues to constrain consumer demand.

The SADC division covers Angola, Botswana, the Democratic Republic of Congo, Eswatini, Lesotho, Malawi, Mauritius, Mozambique, Namibia, Zambia and Zimbabwe.

However, Famous Brands did not disclose separate revenue or operating profit figures for Namibia in its interim results.

The regional performance came amid a mixed half-year for the group, whose overall revenue increased by 2.3% to N$4.3 billion from N$4.24 billion in the six months to August 2025.

Operating profit declined by 4.7% to N$375 million, while headline earnings per share fell by 3.2% to 228 cents from 236 cents. The operating profit margin narrowed to 8.6% from 9.3%.

Famous Brands said sustained demand for its Leading Brands portfolio and expansion of its franchise network supported revenue growth, with increased activity also benefiting its supply chain business.

However, pressure in its Signature Brands portfolio and weaker performance in some markets outside South Africa constrained profitability.

In South Africa, revenue from Leading Brands increased by 2.5% to N$508 million, supported by 2.7% growth in system-wide sales and 0.8% growth in like-for-like sales.

The group opened 36 new restaurants during the reporting period, including smaller-format outlets and drive-through facilities aimed at meeting demand for convenience.

By contrast, revenue from Signature Brands in South Africa declined by 8.4% to N$95 million, while the division’s operating loss widened to N$9 million from N$7 million.

The South African supply chain business recorded revenue growth of 5.5% to N$3.1 billion, while operating profit increased by 13% to N$230 million.

The performance benefited from higher case volumes associated with the insourcing of Coca-Cola and frozen retail product distribution.

Famous Brands is also restructuring its Botswana operations as part of its capital-light expansion strategy outside South Africa.

The group has entered into a transaction to reduce its shareholding in Retail Group (Pty) Ltd from 51% to 30%, with existing Botswana-based partners expected to acquire the 21-percentage-point interest.

The transaction is expected to be completed by 28 February 2027, subject to regulatory approvals and other conditions.

Once completed, Retail Group will cease to be a consolidated subsidiary and will instead be accounted for as an associate.

Famous Brands will continue receiving master licence fees from Botswana under the existing arrangement.

The group recognised a N$41 million goodwill impairment loss during the reporting period arising from the expected loss of control of its majority shareholding.

Despite weaker operating earnings, the group reported improved cash generation.

Free cash flow increased by 108% to N$459 million from N$221 million, while cash generated by operations rose by 19.5% to N$564 million.

Net debt declined by 20.2% to N$881 million from N$1.104 billion a year earlier.

The board declared an interim dividend of 170 cents per share, up 4.9% from 162 cents in the previous period, representing a total payout of approximately N$170.3 million.