Mmegi

Sefalana profits hit fresh records

Higher and higher: Chauhan
Higher and higher: Chauhan

Sefalana Group has recorded a profit before tax of P219 million for the 26-week results period ended October 27, 2024, despite facing margin pressures, supply chain disruption, and rising raw material costs.

The profits mark a seven percent increase from the P204.8 million recorded over the same period last year.

According to results released this week, Botswana contributed the most at 67%, followed by Namibia at 27%, Lesotho at five percent, and Zambia at only one percent. Manufacturing output from South Africa remained below optimal levels whilst rising raw material costs continued to exert pressure on margins, during the reporting period.

The group’s half-year revenue reached a record P5.4 billion reflecting a 14% increase from the previous period.

Group Managing Director Chandra Chauhan attributed the growth to strong market share penetration, despite cost constraints on product availability caused by challenges faced by suppliers and manufacturers.

"Sefcash Botswana increased its turnover by 13%, Metro Namibia by 17%, Sefalana Lesotho by 12%, and Foods Botswana by 26%. “Like-for-like sales increase in Botswana was 10%, Namibia, six percent, and Lesotho, eight percent," he said.

Further, the MD said consumers adjusted their shopping habits due to financial and environmental uncertainties leading to increased price sensitivity, more frequent store visits, and a shift toward value products and essentials. Basket sizes showed a moderate increase though at lower margins.

"Despite these shifts, Sefalana has maintained steady growth navigating market dynamics whilst keeping products available to meet consumer demand,” he said.

Sefalana reported earnings per share of 62.4 thebe, slightly above the 61.5 thebe recorded in the prior year. However, the effective tax rate increased to 28% from 25% due to higher dividend payments by subsidiaries to support group-wide dividends.

The group’s net asset position grew to P2.6 billion up from P2.5 billion in April 2024, even after distributing its highest-ever dividend. As at October 2024, Sefalana’s market capitalisation had reached P3.4 billion, cementing its position as the largest retail and wholesale company on the Botswana Stock Exchange (BSE).

Sefalana was also the fourth best performer on the local exchange last year, in terms of share price growth. The group also had the BSE’s fifth-highest turnover in 2024, which is a measure of the number and value of shares traded.

Directors said the company’s dividend payout policy which distributes 50% of earnings to shareholders continues to provide a steady income stream. They said despite the liquid nature of Sefalana’s stock, large institutional shareholders have chosen to retain their holdings further demonstrating confidence in the company’s long-term value.

The directors added that despite ongoing supply chain disruptions and rising costs, Sefalana’s resilient financial strategy, strong market position, and effective inventory management place it in a strong position for continued growth.

“The company remains focused on delivering value to shareholders whilst adapting to evolving consumer trends in an unpredictable market,” the directors noted.

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