- Cresta Marakanelo reports 10% revenue growth in H1 2023.
- Increased average daily rates drive higher revenue per available room.
- Strategic investments and cost containment contribute to profitability.
Harare- Botswana-based hospitality company Cresta Marakanelo Limited (CML) has announced its unaudited consolidated financial results for the six months ended June 30, 2023. The company, listed on the Botswana Stock Exchange, reported a 10% increase in revenue compared to the same period last year, driven by higher average daily rates (ADR) and increased arrivals of foreign guests. This positive performance is in line with the overall recovery observed in the tourism and hospitality industry.
The leisure segment played a significant role in driving revenue growth, with hotels in popular tourist destinations contributing to the higher ADR. As a result, the group's revenue per available room (RevPAR) was 8% higher than the first half of 2022. The second quarter outperformed the first quarter, accounting for 56% of the total revenue generated during the six-month period.
CML's operating profit increased by 24% compared to 2022, and profit before tax was 32% higher. The company achieved this growth by implementing robust cost containment measures while strategically increasing its spending on sales and marketing. This investment aims to ensure sustainable profitability in the future, following a period of reduced expenditure during the pandemic.
Despite the positive financial performance, CML experienced an 8% increase in finance costs on interest-bearing borrowings due to a rise in the prime lending rate. However, earnings before interest, tax, depreciation, and amortization (EBITDA) improved by 8% to reach P43.32 million.
The company's statement of financial position reflects an 11% increase in shareholder's equity, driven by a decrease in total liabilities. Total assets declined by 6% compared to the first half of 2022, primarily due to the expected decrease in book values of right-of-use assets and corresponding lease liabilities. Additionally, cash and cash equivalents decreased by P7.9 million, mainly due to strategic cash deployment for refurbishments and debt service payments.
CML generated stronger positive cash flows from operating activities, with a superior EBITDA cash conversion rate of 95% compared to 51% in 2022. Net cash generated from operations increased by 74% to reach P50.8 million. However, the company experienced a net cash outflow of P21.8 million from investing activities, primarily driven by ongoing expansionary and refurbishment projects aimed at ensuring long-term profitability.
Looking ahead, CML's top strategic priority is to continue implementing expansion projects and refurbishments across its existing asset portfolio. Cash generation remains a key focus, as it will enable the company to self-fund future projects in its pipeline. CML aims to remain competitive by closely monitoring and proactively responding to the unique challenges and opportunities in the current operating environment. Leveraging technology and digitalization will also play a crucial role in optimizing operations, service provision, and cost effectiveness.
Respect Gwenzi, a financial analyst with Equity Axis, suggests that Cresta Marakanelo should focus on continuous innovation and differentiation to navigate the competitive hospitality industry. By offering unique experiences and services, the company can attract more guests and increase its market share. Additionally, Gwenzi recommends that Cresta Marakanelo invest in targeted marketing campaigns to promote their properties internationally, showcasing the rich cultural heritage and natural beauty of the unique countries it has hotels in. By increasing awareness and appealing to foreign tourists, the company can boost foreign receipts and drive sustainable growth in the long term.
In conclusion, Cresta Marakanelo Limited has reported positive financial results for the first half of 2023, with revenue growth, improved profitability, and strong cash flow generation. The company's strategic initiatives, including expansion projects and refurbishments, demonstrate its commitment to sustainable profitability and maintaining competitiveness in the hospitality industry.
-Equity Axis News
