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ZSE-listed hospitality group, African Sun returned to profitability in the full year to December 31, 2016 after posting an after tax profit of $4,94 million from continuing operations compared to a loss of $6,15 million for the 15 months to December 31, 2015.

The group attributed the return to profitability to a number of cost cutting measures implemented during the period under review.

Of the profit of $4,94 million, $1,57 million was from core operations, an indication of the strengthened structures, which should aid the group to record more profits if revenue improves.

The group’s chairman Mr Herbert Nkala also indicated that the group also benefitted from other income of $3,03 million from the disposal of African Sun Limited PPC for $1,93 million, a $0,28 million export incentive from RBZ, $0,23 million payout in insurance claims and $0,28 million from the sale of fixed assets.

The group also managed to reduce costs on financing the business by 70 percent due to the restructuring of the company’s debt.

Earnings before interest, tax, depreciation and amortisation at $5,48 million was 1 percent below the prior period. This was despite a 12 percent drop in revenue.

Group revenue declined to $43,6 million during the period under review from $63,2 million in the prior period. Mr Nkala attributed the decline in revenue to a drop in room occupancy due to a weak rand against the US dollar, which affected tourist arrivals into the country, which has been perceived to be expensive due to its US denominated costs.

“There was a noticeable decline in the average monthly revenues for the period under review reflected by the drop in room occupancy from 48 percent in the prior year to 44 percent.

“The weak South African rand against the US dollar has a negative impact on tourist arrivals into Zimbabwe as the US dollar denominated costs render Zimbabwe a more expensive option compares to other regional destinations,” he said.

Revenue per available room fell to $41 from $45 due to a combination of factors although the average daily rate remained constant at $93.

Looking ahead Mr Nkala said they were focusing on driving volumes growth through specific and targeted promotions for both the domestic and international markets while fully utilising e-marketing, social media and online platforms to reach a wider market.

He also said focus will be on ensuring customer satisfaction through exceptional service delivery and attractive loyalty programmes and enhancing the bottom line through reduction of costs and operating overheads. —BH24