Botswana: Brewer reports poor performance season

Sechaba Brewery Holdings group has reported an overall poor performance in sales and profits for the year that ended March 31, 2006 because of the difficult trading environment after the devaluations of the national currency, Botswana Press Agency announced June 01.

However, the group has declared a dividend of 17thebe per share.

Sechaba owns Kgalagadi Breweries and Botswana Breweries, and sells clear canned clear beer brands, soft drinks, chibuku, wines and spirits.

The company reported a decrease in turnover by 5.8 per cent and total dividend for the 12 months decreased by 12.3 per cent.

The groups operating profits decreased by 8.5 per cent, profit before tax is down by 8.8 per cent and while profit after tax is down by 8.9 per cent and earnings per share down by 7.0 per cent.

Presenting the year-end results to the press in Gaborone this week, the groups Managing Director Hloni Matsela said the results were less than complimentary with volumes declining by 12 per cent across the three product groups.

Kgalagadi Breweries volumes dropped by 12.0 per cent while Botswana Breweries volumes went down 5.7 per cent. Beer went down by 17.9 per cent, soft drinks down by 11.6 per cent while wine and spirits rose by 2.5 per cent.

The reasons for the rise in the latter was the switch to cheaper wines as consumers search for value in the prevailing hard economic times.

Matsela said the devaluation of the national currency, coupled with inflation, had caused a distortion in the macro-economic conditions of Botswana had adversely affected the group because it was highly reliant on strategic raw materials from South Africa.

However, despite the poor performance of the group, its share prices have remained stable. It was the dominant thinking in the business community that the nation has passed the worst.

He said indications were that trading conditions would remain difficult going into the current financial year but staff retrenchment was not one of the options to mitigate the declining bottom-line. However, strategies are in place to minimise the impact on the profitability of our operations, he said. These will largely concentrate on sales and marketing to stimulate top line performance.

Matsela said other options included outsourcing of non-core business activities. The group, however, remained the dominant player by share market hovering between 95 and 98.

The premium brands such as Amstel and Castle Lite would continue the current growth momentum. A new brand and pack extension will continue on the soft drink side of the business.

Pack renovations were in the pipeline to re-invigorate some of the group’s product offerings, as part of a multi-dimensional approach to mitigate the downturn.

He assured stakeholders that all citizen economic empowerment programmes that had been put in place by his predecessor would continue because they were part of the group’s long-term strategy.

E-malt.com, the global information source for the brewing and malting industry professionals. The bi-weekly E-malt.com Newsletters feature latest industry news, statistics in graphs and tables, world barley and malt prices, and other relevant information. Click here to get full access to E-malt.com. If you are a Castle Malting client, you can get free access to E-malt.com website and publications. Contact us for more information at marketing@castlemalting.com .