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Food for thought from SA's original fra... A dash of purple does wonders for the br... Pay-TV viewers face tough choice... Getting more out of astral real estat... SA's getting festive about digita... Satellite TV needs to be demystifie... Beaming into Randburg from the worl... A Phoenix rises from the ashe... A taste that's taking the world by stor... Mighty Pie is an instant hi... It's a small price to pay for succes... Steering ahead to a future full of promi... Coasting in the slipstream of succes... |
Steering ahead to a future full of promise'We have repackaged our products to give them greater visibility in the supermarkets' TWO years after listing on the JSE, Steers trades at a price-earnings ratio of 15,2, equivalent to that of its erstwhile competitor, Spur. This rating is the pay-off for surpassing the 35% annual earnings growth forecast in the group's pre-listing prospectus. In the year to February 1996 earnings leapt by 86%, and financial director Nick Galatis is confident of achieving a growth rate of "at least" 35% over the next two to three years. This will be achieved by maintaining the group's current rate of store openings of between 30 and 35 a year, and improvements in operating efficiencies. Turnover improved 71,8% to R84,7-million, while pre-tax profit was up 67,3% to R10,1-million. Dividends per share were up 57,1% to 11c and earnings per share up 59,4% to 22,32c. The 1996 performance was lifted by the absorption of Longhorn and a record rate of store openings which boosted income from franchise fees, product sales and shop development. Galatis says more income is generated from sales of sauces and food to franchisees than from royalties. Sales of Steers sauces through retail chains are worth R12-million a year, but plans are afoot to substantially increase this throughput. "We have just repackaged all our products to give them greater visibility in the supermarkets," says Steers managing director John Halamandres. "We have been retailing our sauces through supermarkets for several years, but only now are we starting to do above-the-line advertising to promote sales." The product range includes Steers-branded sauces, marinades, salad dressings, seasonings and spices. In the six months to August 1996, Steers continued its ripping pace of growth with a 35,9% increase in turnover to R49,4-million, a 30,7% increase in operating profit to R5,5-million and 35,7% growth in attributable earnings to R3,7-million. Historically, the second six months are stronger than the first, and a continued improvement in the second half is expected. The current operating margin of 12,5% could be lifted to about 16% through improved efficiencies and by adding a number of non-franchised stores to the group. This, however, would require financing and the introduction of debt onto the balance sheet, but the addition of several company-owned stores would have a positive impact on the bottom line. This year international expansion began to have a material impact on performance. The two outlets in Zimbabwe exceeded budgeted sales by 150%, but this has since been superseded by the Nairobi store, which opened in July, which broke all records for a new store opening. Galatis says the Greek operation, comprising seven stores, is proving expensive to maintain and will not make a positive return in the current year, although this will not significantly affect the group's performance. It has since been decided to rationalise the Greek operation by closing two of its stores and restructuring the remaining stores, possibly introducing a local partner to create a platform for expansion. The launch of the Mighty Pie chain, now 12-strong, should also start to have an impact on financial performance during the current year.
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