Americana profit drops on geopolitical tensions and Ramadan-related slump

Americana, founded in Kuwait in 1964, introduced fast-food restaurants to the region in 1970. Photo: Americana

Americana, the largest quick-service restaurant operator in the Mena region, reported a double-digit drop in its first-quarter net profit and revenue, driven by ongoing geopolitical tensions and a seasonal sales slump linked to the Ramadan period.

The company’s net income attributable to the shareholders of the parent company dropped 51.8 per cent annually to $28 million.

Higher depreciation charges and rent expenses due to new store openings during the January to March period also negatively impacted the profits, the company said in a statement.

Its revenue stood at $493.5 million, down 16.3 per cent year on year, in the last quarter.

“Decline in revenues were primarily driven by lower like-for-like sales due to ongoing geopolitical tensions in the region, as well as the seasonal effect of Ramadan period,” Americana said, without giving details.

However, Americana said it is committed to navigate the “current economic adversities while continuing its expansion strategy”. It expects to open 200 to 225 new stores this year and focus on markets that are less impacted by the current regional macro-environment.

Americana said it aims to boost revenue recovery through initiatives such as smart pricing, targeting, promotion and marketing, focusing on driving transactions through “value, crave and familiarity”.

In the current quarter, it “anticipates a lesser impact of Ramadan on sales” compared to the second quarter of last year.

Americana, a franchisee of a number of international food and beverages brands in the Middle East, operates in 12 countries across the region, North Africa and Kazakhstan.

The company’s portfolio includes KFC, Pizza Hut, Hardee’s, Krispy Kreme, Peet’s Coffee, Wimpy, TGI Fridays, Costa Coffee and Baskin Robbins.

Americana raised $1.8 billion from its initial public offering in November 2022.

It was the first company to be dually listed on Saudi Arabia’s Tadawul stock exchange and the UAE’s Abu Dhabi Securities Exchange, the Arab world’s two largest stock markets.

Americana’s IPO was the largest in Saudi Arabia in 2022.

During the first three months of the year, Americana reported a lower cost of inventory compared to the prior year period, because of “optimised use of raw materials and strategic procurement”.

Americana opened 37 stores in the March quarter. Its portfolio stood at 2,456 restaurants, with 37 under construction, as of March 31.

Last month, the company approved distribution of total dividends of $179.4 million, split between ordinary dividend of $129.7 million and an additional one-time special dividend of $49.7 million to its shareholders.