Innscor changes business model

Business Editor
Innscor last week announced the creation of six new clusters which will carry the group’s strategy into the next three-five years. The clusters announced by new chief executive Mr Toni Fourie are Quick Services Retail, Light Manufacture, Commodity Trading, Logistics and Distribution, Retail/Wholesale and Finance treasury and legal. Former chief executive John Koumedis will head up another cluster Corporate Finance and Innscor International.

Mr Fourie, who gave an 80-minute “team-building” presentation, told analysts yesterday that Innscor had the ambition and the re-organisation would mark the start of a business which operates beyond Zimbabwe.

“We are reviewing our model and re-configuring our assets. We need to know what great looks like and this can only be achieved by building a model that achieves superior levels of returns.”

He said the mission was to improve the quality of life of the customers in chosen target markets in a bid to create and unlock value.
“We do this by brining access to best value food, fast moving and durable goods at the lowest price. The group is targeting the mass market.”

He also used VUCA to describe the current business environment in Zimbabwe. VUCA standing for Volatility, Uncertainty, Complexity and Ambiguity.
As an internal reflection he noted that Innscor had a lack of clarity on its positioning strategy which then led to the poor performance over the last five years.

“Margins have been falling, the cost base is excessive, high level of inefficiency, excess capacity therefore utilisation is low while capex over the last two years has impacted on profitability as revenue growth was stunted.”

He noted that the current Innscor structure was complex, cost heavy and lacked clarity on the role of its corporate strategy.
“In fact there is an absence of group strategy or if it’s there it is unclear.”

Fourie said Innscor was not an investment company but rather a management company.
To that end, the group is targeting a superior ROE in excess of 30 percent using PBT, free cash of up to 60 percent of EBITDA, to develop current or acquire new infrastructure, revenue in excess of 50 percent outside Zimbabwe and to mitigate the cyclical and market risk in industry.

Mr Fourie said Innscor would win with six ingredients; operational excellence, lowest cost, vertical integration, diversification, growing organically through acquisitions and integrations as well as offering a unique ownership, partnership or franchising models.

“These six ingredients will help us buy, produce, move and sell”
He said the group was finalising its three-five year strategic group plan, its three year finance model and individual company strategies.

“The need to change is inevitable and indisputable. We need to do it now”