Choppies interim profits decline 15%
Botswana multinational grocery and general merchandise retailer, Choppies Enterprises, finally released its long overdue results for the six months to end December on Friday and reported a 15 percent decline in profits to P66 million (R95.83m).
The group cited the continued weakening of the Zimbabwe currency against the Pula as the reason for the decline in its profits.
The group has operations in Botswana, Zimbabwe, Zambia and Namibia following the discontinuing of its operations in South African, Kenya, Tanzania and Mozambique.
The results were also released after the group experienced countless delays after changing its auditors when PricewaterhouseCoopers (PwC) resigned in September 2019 as auditors and were replaced by Mazars.
The group also faced legal and forensic investigations as well as the Covid-19 outbreak to add to the delay of the publication of its results.
Its revenue from continuing operations declined by 17.5 percent to P2.97 billion while gross margins improved slightly to 22.9 percent compared to 22.5 percent a year earlier following another good performance in the Botswana operations.
Its earnings before interest, tax, depreciation and amortisation (Ebitda) decreased by 13.69 percent to P171.5m.
However, the group’s Botswana business continued to show strong resilience in an increasingly competitive market, with revenue increasing by 6.6 percent to P2.29bn. Its gross profit margins increased to 24.5 percent, with increased consumer demand in an economic environment of low interest rates and a weak rand.
“In addition, improved buying and further addition of house brands contributed to profitability. Financial services and value-added segments contributed well to the bottom line with significant effort and resources placed behind these to improve the service delivery and profitability,” the group said.
The business reported a 26 percent increase in Ebitda to P182m.
In Zimbabwe, revenue declined by 26 percent to P268m, resulting from a 145 percent weakening of the local currency against the Pula during the previous 18 month. The group said Zimbabwe is one of the most challenging markets to operate in, with hyperinflation in three digits, concerns surrounding the economy, changes in the money market and public disturbances.
In Zambia, revenue fell by 3.7 percent to P340m and the gross profit margin declined to 16.5 percent.
“The Zambian economy has been hard hit by the weakening global demand for commodities which has led to depressed commodity prices. In addition, the Kwacha depreciated a further 27 percent against the Pula. All this hampered domestic demand,” the group said.
The Namibian operation reported a 14.6 percent increase in revenue to P69.2m and gross profit margins improved to 17.8 percent. The group said this operation is still relatively small, with five stores, and is yet to reach a critical mass needed to generate sustainable profitability levels.