01 Sep 2016

Sefalana Group has posted positive results buoyed by its cash and carry subsidiaries, which contributed 92 per cent to revenues and 57 per cent to profit before tax. 

When analysing the final results for the period ending April 2016,  Mr Donald Motsumi of Stockbrokers Botswana said the group posted good results for the financial year, with the Fast Moving Consumer Goods (FMCG) primarily driving the company with revenues growing up by 10.4 per cent to P3.8 billion.

The FCMG segments of the group, Sefalana Cash and Carry Limited and Metro Namibia collectively contributed 92 per cent to revenues and 57 per cent to profit before tax.

Sefalana Cash Carry alone contributed 64 per cent to overall revenues and 48 per cent to profit before tax.

Two retail stores in Mogoditshane and Hukuntsi were opened during the year bringing the total number of stores across the country to 50. These comprise three Hyper stores, 25 cash and carry stores and 22 supermarket retail outlets.

The group’s strategy of growth while avoiding cannibalism amongst their stores has worked with the subsidiary boasting a 9.2 per cent rise in sales to the tune of P2.4 billion, management reporting a like for like sales increase in the range of 9-10 per cent.

Profit before tax increased by 9.6 per cent to end the year at P98.7 million.

During the year, Sefalana introduced a number of strategies amongst them an online shopping site in Botswana looking to further penetrate consumers on the latter end of the spectrum, Mr Motsumi says. 

Metro Namibia also posted positive results contributing 29 per cent to group revenues and 10 per cent to profit before tax. Revenues grew by 35 cent to P20 million.

A new store was acquired in Swakopmund bringing the total number of stores to 14.

Mr Motsumi said with 14 stores, the group was making strides towards its medium term target of 20 stores across the country and with ‘medium term’ being a period of three years, they assume two stores opening per year.

Sefalana management has hinted at looking to start up a property division in the country, which would support their organic growth plans as well as further diversify their income streams.

While the retail sector had a good year, the manufacturing entity, Foods Botswana had a challenging operating period. Revenues fell by 11 per cent to P163 million.

Mr Motsumi notes that cost of sales only shrunk by 11 per cent partially due to the strengthening of the US Dollar over the 12 month period which meant more expensive grain imports for the manufacturer.

Gross profits fell by 20 per cent to P36 million and administrative expenses also increased by 22 per cent due to the staff recruitment for the beverages division expansion. Profits before tax fell by 39 per cent to P18.5 million.

The milling division which depends on government tenders had difficulties as they were awarded late and further, they were shared between Foods Botswana and its competitors.According to Mr Motsumi, Foods Botswana delivered on its mandate and went on to supply the areas where their competitors failed to deliver.

During the year a new maize plant was established in Serowe and began operating in October 2015 and two new silos were also built.

Foods Botswana purchased UHT milk plant and began the manufacturing of milk in December 2015 with the supply of the in-house milk to the Sefalana Cash and Carry stores.

Commercial Motors, the dealer for MAN, TATA and Honda vehicles is also dependent on government tenders and it underperformed as they were few.

However, the company reports regular income from vehicle servicing and parts sales during the period, at a growing rate.

Mechanised Farming (Pty) Ltd registered a number of tractor sales throughout the year and also extended its farming implement product offering.

It also improved the sales of generators and water pumps over the period which eventually leveled off in the second half of the year following stabilisation of power and water supply.

The poor weather conditions have negatively affected the business. ENDS