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Global oil price movements weigh on Engen

Global oil price movements weighed on Engen
International crude oil price movements have been blamed for the decline in performance of Engen Botswana during the half-year period ended June 2017.

According to the managing director of Engen, Chimweta Monga the company’s net profit before tax decreased by 25% to P63.9 million during the period under review compared to P83.8 million the previous year.  He attributed this to inventory gains being lower than the comparative period in 2016 due to movements in international crude oil prices. Monga also decried government’s reduction of one of the slate cost recovery elements for product movement from South Africa to Botswana for a period of two months during the course of the half-year.

He said growth in the mining sector has remained subdued during the first half of the year mainly arising from the closure of BCL Mine at the end of 2016, noting that this resulted in a contagion effect on other sectors of the economy, which depend on this sector for purchase of their output. Earnings per share also decreased from 46.7 thebe per share during the same period in 2016 to 34.6 thebe per share for the period under review.

However, Monga noted that turnover increased by 10% from P965 million in the previous period to P1.06 billion in the period under review mainly as a result of increases in controlled selling prices in March 2017. He said the company’s sales volumes in 2017 to date were marginally higher than those recorded in 2016.

“The retail channel of the business continued to perform well beyond expectations notwithstanding the modest performance of the economy and the significant levels

of competition in the sector,” he said. Monga said this resulted in a growth of retail sales compared to the same period in 2016.  “We expect to stream new retail outlets during the second half of the year, which we are confident, will place us in good stead to exceed the operating performance of 2016,” he said.

He said the company’s strong brand and unique convenience offering continued to be a valuable differentiator in the market, adding that it contributed to the successful financial performance in the period under review. In addition, he said the commercial side of the business continued to be an important contributor to overall company performance. “It is however pleasing to note that a number of road construction projects have been commissioned and this should somewhat ameliorate the impact of the mining sector on the consumption of energy products,” he said.

With new infrastructural projects being commissioned, Monga said they expect that the contribution of the commercial channel will continue to improve. He said the petroleum sector continued to expand very rapidly with a number of new retail facilities being built during the period under review.

He further said the petroleum company achieved a high level of health safety, environment and quality (HSEQ) performance with no spills or contaminations recorded in the period under review. Meanwhile, the company has declared an interim dividend of 15 thebe per share payable to ordinary shareholders on or about October 20, 2017.




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