Sefalana Holdings Limited is looking to expand further into the African continent in the Fast Moving Consumer Goods (FMCG) business. Group Managing Director Chandra Chauhan said this during presentation of Sefalana financial results the year ending April 30, 2016 on Friday but could not disclose which markets they are looking to enter after successfully entering the Namibian market in 2014 where the business trades under the Metro brand. Besides operating in Botswana and Namibia, the diversified listed company has a business in Zambia in the property market and now Sefalana has took inspiration for success achieved in those countries particularly in the FMCG sector.
During the year which ended 30 April 2016, Sefalana revenue was up 10.4 percent on prior year to P3.8 billion and profit before tax was P207.1 million, an increase of 8.4 percent. Sefalana Cash and Carry Limited contributed 64 percent and 48 percent of the group’s revenue and profit before tax and the retail division is reportedly gaining traction in the Botswana market as the number of stores increases and brand awareness improves. Metro Namibia contributed 29 percent and 10 percent of the group’s revenue and profit before tax for the year respectively and the group acquired another store during the year to take the total number of stores in that country to 14.
The weakening of the Namibian Dollar over the year is said to have resulted in a loss in the translation of the net investment value of the Namibian business. The investment value dropped from P18 million to P14 million but it is expected that the exchange rate will stabilise in the coming year. The trading segment, which consists of Commercial Motors and Mechanised Farming, contributed 4 percent and 9 percent of group turnover and profit before tax in that order. Profitability dropped by 9 percent compared to the previous period. Contribution by other segments such as Manufacturing – milling and beverage divisions and group properties – are not included due to varying reasons such as non-participation in tenders and acquisitions being made at the latter stages of the year such as in the case Delta Dairies property.
In Zambia the property is said to be fully let and continues to generate a good rental income stream. However, the decision by the country’s government to discontinue the use of the USD as a secondary currency and enforcing the use of Kwacha is expected to expose the group to additional foreign exchange risk. This is because rental leases will now have to be converted to the Zambian currency Kwacha. As a result of poor copper earnings in Zambia leading to depreciation of the local currency, the value of the net investment in Zambia denominated in Zambian Kwacha is said to be now worth less than it was at April 2015 in Pula terms.