Sefalana revenue up 18%

SHARE   |   Monday, 01 February 2016   |   By Kabelo Adamson
Chauhan presenting Sefalana Financial Results on Friday Chauhan presenting Sefalana Financial Results on Friday PIC: OMANG KILANO

Sefalana Group says despite challenges it faced, the group has been able to remain competitive, achieving an overall profit before tax of P80.4 million for the six month period ended 31 October 2015. The financial results, which were released this week show that group revenue went up by 18 percent to P1.8 billion with gross profit jumping by 11 percent to P146 million. Sefalana Cash and Carry contributed 66 percent and 58 percent of the group’s revenue and profit before tax respectively. During the period, Sefalana increased its market presence by opening additional Sefalana Shopper supermarkets in Mogoditshane and Hukuntsi to take the total of retail outlets to 22 and total number of Sefalana stores across Botswana to 50.

Speaking during the results presentation on Friday morning, Sefalana Group Managing Director Chandra Chauhan said their revenue has more than doubled in a four year period and they remain optimistic about the second half of the year. Chauhan said the local retail division is gaining traction as the number of stores increases and awareness of the brand improves. The trading segment of the group, which consists of Commercial Motors and Mechanised Farming, is said to have contributed three percent and six percent of Sefalana turnover and profit before tax respectively. Profitability in this sector is reportedly five percent lower when compared to the prior period.

The other sector-manufacturing contributed just one (1) percent to the group profit before tax. The small contribution is attributed to delays in awarding of 2015/16 tenders which resulted in almost four months of the six-month period when the business was reliant on only private customer sales. Improved performance from the sector is anticipated after Foods Botswana under its beverage division bought a UHT milk plant from the liquidated Delta Dairies. Sefalana also runs a property in Zambia which is reportedly facing challenges after the government discontinued the use US Dollar as a second currency in the country, leaving the Kwacha as the only currency allowed for use. The move is said to have exposed the group to additional foreign exchange risk as rental leases will now have to be converted to the Kwacha.

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The abandonment of the USD has also resulted in the value of net investment in Zambia being worth less than it was April 2015 in Pula terms. As a result of this, Sefalana lost P25 million in foreign exchange. Chauhan said Kwacha depreciated against major currencies including the Pula and the full impact of such will be unknown until the situation stabilises. After acquiring the Metro stores in Namibia, Sefalana has announced that it has achieved a significant presence in the country in a short space of time. Metro Namibia contributed 28 percent and 17 percent of group revenue and profit before tax respectively. During the same period, Sefalana acquired its 14th store in Namibia with other sites being considered for additional stores.

Chauhan says they intend to acquire more stores in Namibia during the coming period and have eyed a number of Megastores retail shops in that country after acquiring one of their stores during the period under review. During the period, Sefalana Group undertook various initiatives including refreshing its brand and launching an online shopping service. Sefalana partnered with Botswana Post to offer delivery of items purchased through online shopping which Chauhan said are delivered within 24 hours of placing an order. Looking into the future, Chauhan said they will continue to focus more on fast Moving Cosumer Goods (FMCG) segment and further aims to relocate the fruit juice plant from Ramotswa to Gaborone. Sefalana will also start to develop property projects both in Botswana and Namibia.

The group has not only been achieving growth in revenues and profits, its Share Price according to Chauhan grew by 384 percent in four years. The company shares traded at 1353 Thebe per share on Friday.