Famous Brands Limited

For H1, revenue increased 5.6% versus the prior period, or ZAR 223 million higher. Reported headline earnings were ZAR 2.36 per share, up 8% year over year. Operating profit increased by ZAR 21 million, and gross profit margins were described as trending higher or at similar levels across divisions. Cash generated from operations decreased by 5.3% due mainly to higher working capital, which rose because of beef price escalations and inventory up 16.4%. The company declared a dividend of ZAR 1.62 per share. Long-term debt was ZAR 1.1 billion, including a ZAR 143 million financing facility, with ZAR 223 million of undrawn borrowing facilities available. Looking ahead, management said H2 will focus on menu agility, promotions, loyalty, digital engagement, SADC expansion, optimizing AME, and leveraging logistics and manufacturing investments; no formal next-quarter revenue or EPS guidance was given.

Darren Hele said the business delivered a solid set of results, but June was soft and held back the like-for-like recovery. His tone was constructive but candid: he highlighted “green shoots” from no load shedding, lower rates, tourism recovery and improving logistics, while also acknowledging clear drags in Signature Brands, AME, retail and some SADC markets. Strategically, he emphasized value offerings, loyalty, digital-first engagement, drive-thrus, delivery and supply-chain upgrades as the main levers to protect share and improve profitability.

Nelisiwe Shiluvana said the half-year showed positive momentum, with revenue up 5.6%, operating profit ZAR 21 million higher, and reported headline earnings per share at ZAR 2.36, up 8%. She noted gross margins were at higher or similar levels across divisions, but working capital increased because of beef and coffee price pressure, driving cash generated from operations down 5.3%. She also pointed to ZAR 462 million of net working capital, inventory up 16.4%, long-term debt of ZAR 1.1 billion, ZAR 223 million of undrawn facilities, and capital expenditure equal to 3.3% of capital, including cold storage, store rollouts, consumer-facing technology and manufacturing efficiency projects. She said the company remained in a strong cash generation position and paid a ZAR 1.62 per share dividend.

Analysts pressed management on whether core food margins can recover in H2, whether weaker brands should be cut, why the stock has been under pressure, and whether the group should shift toward SA-only operations. Darren said gross margins were stable aside from beef and coffee, that beef appears to be abating and coffee has stabilized, and that he did not favor a wholesale move to SA-only because SADC is integral and AME is more complex due to franchise obligations. Asked about debt facilities, Neli said three facilities, a mix of amortizing RCF and bullet debt, were deferred to August 2027 and refinancing planning is now imminent. On chicken-on-bone exposure, Darren said the company constantly evaluates acquisitions but sees chicken as an opportunity within existing brands rather than a need for a new standalone acquisition.