Local brewers report P304.2 million profit in six months

editor1 month ago4156 min

Sechaba Breweries Holdings Limited subsidiaries, Kgalagadi Breweries and Coca Cola Beverages Botswana, have reported a remarkable profit-after-tax totaling P304.2 million from sales of beer, beverages, soft drinks, and purified water during the first half of 2024.

Sechaba Brewery Holdings Limited holds a 49.9% stake in both Kgalagadi Breweries (Pty) Ltd (KBL) and Coca Cola Beverages (Botswana) (Pty) Ltd (CCBB).

KBL specializes in the manufacturing, importation, distribution, and marketing of clear beers, alcoholic fruit beverages, and traditional beers. In contrast, CCBB focuses on producing, importing, distributing, and marketing soft drinks, purified water, and other non-alcoholic beverages. The overall sales volumes for Sechaba Brewery Holdings Limited’s subsidiaries surged during the first six months of 2024, with KBL’s volumes increasing by 6.4%, from 728,700 HL to 775,700 HL. CCBB experienced a notable 17% rise, from 532,600 HL to 624,900 HL.

Sechaba Brewery Holdings Limited’s abridged unaudited financial statements, released this week by the Botswana Stock Exchange, reveal that KBL achieved a profit-after-tax of P278.9 million from product sales, up from P247.2 million in the first half of 2023. Meanwhile, CCBB reported a profit-after-tax of P25.3 million, an increase from P16.3 million in 2023.

As a result of these exceptional financial performances, Sechaba reported strong financial health and a positive outlook. “For the period, SBHL is pleased to announce a 15% increase in profit after tax compared to the previous half-year results, driven primarily by an increase in sales revenue. Both CCBB and KBL reported positive net revenue growth rates, with CCBB achieving a 12.3% increase and KBL recording an 18% increase. In terms of profit after tax, both associates demonstrated robust growth. KBL achieved a 12.8% increase year-on-year, driven by higher volumes, strategic pricing, product mix, and effective cost containment measures. Meanwhile, CCBB saw a significant profit increase of 55.1%, largely due to rising sales volumes, strategic pricing, product mix, and effective cost containment measures.”

Following these stellar financial results, the company intends to pay a final dividend of 11.1 thebe per share on October 29, 2024.

Sechaba management has expressed confidence that Botswana’s economy will continue to support the beverages sector. Economic growth in Botswana is expected to be driven by improvements in non-mining sectors, following a downturn in the diamond sector. “It is further assumed that advancements in electricity and water supply, as well as growth in the finance, insurance, and pension fund sectors, will influence this growth. Inflation reached 3.7% in July 2024, which is on the lower end of the Bank of Botswana’s 3%-6% target range. The current economic environment is expected to support enhanced performance for SBHL and its associates.”

New projections released by global research firm Business Monitor International last week indicate that Botswana’s household spending on beverages could reach P3.56 billion this year and expand to P5.3 billion by 2028, driven by an expected increase in alcohol consumption in the country. The firm forecasts that by 2028, Botswana’s household spending on alcohol will constitute 30.4% of the overall projected expenditure on beverages, followed by juices (23%), carbonated drinks (6%), and bottled water (1.7%).

The firm also noted that household spending on alcohol in Botswana could grow by P850 million, from an expected P757 million in 2024 to P1.6 billion in 2028, primarily due to increased alcohol consumption, which is projected to rise from around 88 million liters to 95.4 million liters during the same period. Among alcoholic beverages, beer remains the most widely consumed compared to spirits and wine, a trend expected to continue. This year alone, households in Botswana are anticipated to consume approximately 80 million liters of beer, 4 million liters of wine, and another 4 million liters of spirits. The research firm highlighted that beer’s dominance is largely due to its historical and cultural significance, affordability, high local production, and imports from South Africa by breweries like Kgalagadi Breweries Limited (KBL). Effective marketing and wide distribution networks further contribute to beer’s popularity.