A. Zorbas & Sons Public Co. Ltd. announced the opening of two new outlets in recent weeks and the imminent opening of three more stores before the end of the year lifting the total number of retail outlets to 45 from 40 at the end of the first half.
During an investors presentation, Costas Zorbas said the ultimate objective remains to have a balanced geographical presence in all the major cities, towns and areas of Cyprus, offering competitively priced but high standards and hygienic goods.
While ruling out a hasty expansion into Greece, Zorbas revealed that in parallel with the geographic expansion across the island, the Group is also entering new areas.
Probably the most lucrative and promising is the entry into the hotel and catering business, now that the Group’s four production units allow for mass production of confectionery and bakery products.
Another area is the convenient stores through Mega Z, which currently has five units. Other areas of interest include refrigerator and freezing units, entertainment and catering.
“Next year when our production capacity really expands, then we shall be in a position to supply products to the hotel industry,” said Zorbas.
Michael Michael, Group Chief Financial Officer said the company has produced satisfactory results since it listed on the CSE in 2000, managing to lift sales and profits year after year.
“Since we went public at the price of 60 cent per share, our share price has climbed to around CYP 1.35, while during the same period we have given a total of 19.4 cent in dividends,” said Michael.
The rapid expansion has also made A. Zorbas one of the biggest private sector employers, with the total number of staff at end of June at 1041.
Referring to a slowdown in the growth in six month profits, Michael said while sales and gross revenue continued to rise, but a sharp increase in expenses forced net profits to remain at last year’s levels.
Group net profit for the first six month of the year fell to CYP 1.19 mln from CYP 1.31 mln in the same period in 2004, but on an annual basis, profitability has been climbing steadily. From CYP 1.6 mln in 2002, net profits climbed to CYP 1.9 mln in 2003 and CYP 2.4 mln in 2004.
The rise in expenses was due to the renewal of the collective agreement for three years, with 2005 being the first year so taking the full brunt of the increase when compared to the previous year and the fact that the government hiked the minimum wage to CYP 390 from CYP 340. Other factors included higher fuel costs leading the Group’s electricity costs higher.
Zorbas also promised to start reporting like-for-like figures regarding stores open at least 12 months and paying more attention to the low marketability of the share price, which in the first half was just 4.6%, barely enough to keep it in the Main Market sector, but risking exclusion as of next year after the new rules for at least 10% marketability go into effect.
