African Sun in massive profit growth

HARARE - African Sun says its profit surged 1 536 percent to $3,11 million during the half year ended June 30, 2018 from $191 240 in the  same period last year, driven by an increase in tourist arrivals from key source markets.

The listed hotels and leisure chain’s revenue was up 29 percent to $27,04 million from $21,01 million recorded in the comparable period in 2017.

Domestic revenue was up 26 percent while foreign revenue surged 32 percent.

Alex Makamure, the group’s chairperson, yesterday attributed revenue growth to a 10 percentage points increase in hotel occupancy from 45 percent in the previous comparable period to 55 percent.

“Occupancy growth was driven by strong performance from all our markets, with room nights sold for domestic, international and regional increasing 16 percent, 26 percent and 22 percent respectively. As a result, revenue per room increased by 33 percent to $53 from $40 achieved last year,” he said.

Makamure noted that there was a remarkable increase in volumes across the hotels, with city hotels benefiting from elections, conferencing and corporate related business whilst Victoria Falls area hotels benefited from increased foreign arrivals.

The group achieved positive results despite foreign currency shortages in the country.

“The cumulative impact of these macro-economic issues on our business is reflected in prices increases of imported inputs thereby putting pressure on our profit margins,” he said.

In the period under review, African Sun’s operating profit was up 658 percent to $3,87 million from $512 133 driven by increased revenue and cost efficiencies.

Assets declined 0,51 percent to $38,5 million from $38,7 million in the previous comparable period.

African Sun is set to spend $2,1 million towards the refurbishment of hotels to bring them to regional and international standards.

Earnings Before Interest Tax Depreciation and Amortisation was up 174 percent to $5,27 million from $1,92 million.

The group said it is expecting conferencing and international market business to boost performance in the second quarter of the year.

“However, we are confident that we will recover from the lost business in the remaining part of the year as our confirmed bookings are already higher than same period last year for most of our hotels,” Makamure said.

The group paid $1,52 million in rentals to Dawn Properties Limited (Dawn).

African Sun leases seven of its hotels from Dawn.

The group declared a 0,0581 cents dividend payable on September 21.

— The Financial Gazette

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