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Sefalana rakes P232 million in profits

Publishing Date : 07 August, 2018

Author : REARABILWE RAMAPHANE

Botswana ‘s home grown diversified retail & wholesale  group Sefalana  ,which portfolio runs across Southern Africa  successfully managed to emerge from 2017 difficult  trading environment. The Group recorded a whopping 34 percent increase in profit before tax for the year ended 30 April 2018, raking in P232 million.


This is in comparison to the prior year which ended 30th April 2017, a year which the Group operations faced one of the most difficult trading circumstances in years, especially in its major market, Botswana. This was predominately because of the effects of 2016 closure of some major mining companies and parastatals, which spilled over into 2017 and shrunk macroeconomic cash flows as well as domestic purchasing power.


For the year under review, the Botswana Stock Exchange(BSE) listed  diversified  goods and commodities conglomerate put in place several cost saving initiatives in a bid to extract value from the company‘s well diversified group of businesses across the Region. Sefalana Operates in Botswana, Namibia, and Lesotho and of late entered the lucrative South African market and the Zambian property space.


According to the company’s audited financials released this week several customer services nectarines such as online shopping beard fruits as the Group registered a total comprehensive income of P189.1 million representing a 21 percent increase on the prior year.
The Group‘s revenue hit P4.8 billion mirroring a satisfactory rise of 12 percent compared to the prior year.


“We are pleased to report that through this approach, we have been able to close this year on a very positive note. We are confident that our shareholders and potential investors will be pleased with our performance and will be enthused with the forward-looking prospects of our business,” said Chandra Chauhan, Sefalana Group Managing Director this week when addressing stakeholders on the Group performance. One of Sefalana‘s key market is Botswana. The company was conceived in Botswana in the early years of Botswana‘s economic development epoch.


During the year under review Botswana operations continued to contribute significantly to the Group‘s financial performance. Though the division businesses experienced increased pressure on margins for both wholesale and retail segments the operations registered a 3 percent increase in turnover, collecting P2.6 billion compared to 2.52 billion gathered during the financial year ended April 2017. Sefalana Cash & Carry Limited contributed 54 percent and 23 percent of the Group’s revenue and profit before tax for the year, respectively.


However, overall profitability for the division fell significantly.  “Efforts are being made to limit the impact of these pressures as we anticipate restored market conditions and improved results in the ensuing year,” underscored the Group Sefalana boss. At the beginning of the financial year, Sefalana operated three Hyper Stores, 25 Cash and Carry stores and 23 supermarket retail stores across the country, giving the Group a total of 51 stores in Botswana.


“We have taken a cautious approach to new store openings over the last three years as we recognize the saturation levels in the market, and have tried to avoid increasing our overhead costs in any particular area where the market size remains unchanged,” he said. According to Sefalana Executives, strategic approaches enabled the Group to cut cost and save for more profitable operations given the unfavorable trading circumstances that the year under review was.


“Where we are present, we strive to work towards offering our customers a one stop-shop experience and pride ourselves on being first in the market to introduce a number of initiatives”   added The Group MD. Sefalana launched several initiatives to enhance customer service, convenience and efficiency in the process also cashing in big for the company through cost cutting and reduced overheads. This includes Sefalana Online shopping site, Sefalana Mobile App, Sefalana rewards and credit facilities amongst others.


According to  Sefalana Executives, the Sefalana Online Shopping site which the company prides itself  for  being Botswana ‘s first FMGG online purchasing offering  did exceptionally well as it started off in Gaborone and surrounding areas gathering satisfactory feedback.  “Initially, the online service was only offered to our customers in and around Gaborone. In November 2017, we extended this service to Francistown and Maun where our customers in the area requested that we also offer this service to them.”


Namibia operations contributed 32 percent and 23 percent of revenue and profit before tax for the year, respectively. Turnover amounted to P1.5 billion, a growth of 15 percent on the prior year. Profit before tax   for the Namibia division amounted to P54 million, up 19 percent from the prior year.  “Our operations in Namibia continue to grow from strength to strength, making a larger contribution to overall Group results each year, as we enhance our customer engagement and offering,” reads the statement.


During the year under review Sefalana pursed expansion plans in Namibia in a bid to broaden market access and performance for existing stores. The Group’s division in Lesotho which has been operating for the past year and half delivered strong financials for the company: “We are delighted to have built a strong presence in the market in a very short space of time, “said Chauhan.  Lesotho operations registered total turnover of P388 million for the year under review, contributing 8 percent of total Group revenue.


The segment achieved an EBITA of P9.5 million for the year, and a profit before tax of P2.1 million after taking into account finance charges. This according to Sefalana executives is a significant improvement on the loss of P5.6 million experienced in the first six months of trading since acquisition. “We operate in a very low margin environment in Lesotho and therefore look to improve the profitability of this business through top line growth and by offering our customers an excellent service,” he said.


Sefalana also operates heavy duty commodities dealership in Botswana which consists of Commercial Motors (Pty) Limited and Mechanized Farming (Pty) Limited, under this segment the company pushes industrial locomotives, automotives, cars and farming machinery amongst others. The segment contributed 3 percent and 9 percent to Group turnover and profit before tax, respectively.


CML historically relied on tender business, and over recent years has been focusing on growing its private sales as a result of a general decline in tender activity. During the year, the business secured the sale of a number of vehicles to the private sector thereby improving its performance compared to the prior year. Another segment, Manufacturing, consists of Foods Botswana (Pty) Limited, the division contributed 5 percent and 9 percent to Group turnover and profit before tax for the year respectively.


Chauhan, said a greater level of profitability was achieved as compared to the prior year, mainly due to short term orders placed by Government and growth of our house brands within the Beverages division.  The company underscores that for the Milling and Beverages more strategies and expansion efforts were being put in place to diversify business windows for the two divisions in a bid to reduce reliance on government tenders.  On the 26th of July 2018, the Board of Directors of Sefalana Holding Company Limited declared a final gross dividend of 23 thebe per ordinary share.


“Our focus will continue to be on our core segments that generate strong returns for the Group. We identified the need to expand into the Region and have successfully done this through a careful and cautious expansion plan into three countries over the last four years, taking into account the impact of the various macro-economic environments and also considering the foreign exchange risk of retranslation of returns,” said Managing Director Chauhan. 

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