Sefalana bullish as Shoppers brand expands

Brian Benza
Staff Writer | Wednesday January 18, 2012 00:00

 

After going through difficult trading conditions that strained margins and dampened bottom-line performance through the six months ended 31 October 2010, Sefalana says it enjoyed a brighter year because rising disposable incomes pushed profits up.

The company - which holds total or part equity in Sefcash, Foods Botswana, MF Holdings, Kgalagadi Soap Industries and Commercial Motors as well as in a range of other interests in timber, mechanised farming, property and travel and tourism - recorded a profit attributable to shareholders of P18 million for the interim period ended October 2010.

The bullish income warning means attributable profits are likely to be above P21.5 million for the 2011 interim period. A note research from African Alliance Securities observes:

'The company says it expects profit for the period attributable to its equity shareholders to be higher than the results reported for the period ended 31 October 2010 by more than 20 percent. Unaudited interim results of the group will be published by end of January 2012. Accordingly, shareholders have been advised to exercise caution when dealing in the company's securities.' 

 The strong growth is likely to have come from the group's wholesale, retail and distribution arm, Sefcash. The company says Sefcash's penetration into retail business under its Shoppers banner has been well received by the public and that the company has 12 supermarkets operating successfully in line with expectations.

In the period up to April 2011, Sefalana reported that revenue within the Cash & Carry and Shoppers Supermarket businesses increased by 11 percent, mainly through the addition of more retail stores and increased trading at stores opened during the previous financial year. During that reporting period, Sefcash opened seven new Shoppers stores - two in Maun, two in Mahalapye, one each in Tsabong, Kanye and at Gaborone Station - giving the company a solid base of eleven supermarkets nationwide. The last Shoppers opening took place in Palapye after the reporting period in July 2011.

'The rollout of these 12 stores has been achieved within a period of 22 months, and a further five Shoppers are planned to open during the ensuing reporting period,' the company says. 'Sefcash's expansion into retail business under the Shoppers banner is being well received by Batswana and we expect to see long-term growth and profitability from this sector in the coming years.  'We are very bullish about the forthcoming year as the Shoppers supermarkets expect to make a positive contribution to the business as well as Foods Botswana returning to full profitability.'