Regional diversification helps Sefalana maintain performance
Sefalana Group Limited Finance Director, Mohamed Osman says the group’s expansion into neighbouring countries has contributed towards maintaining overall performance.
In the last five years, Sefalana, which mainly focuses on Fast-Moving Consumer Goods (FMCG), launched a massive diversification strategy, entering markets such as Namibia, Zambia, Lesotho and South Africa.
And Osman, speaking recently when Sefalana announced its financial results for the six-month period ending October 2018, says this has helped the group sustain its overall performance.
However, regional diversification has reportedly come at a cost as it brings with it foreign exchange exposure.
As a result, during the period under review Sefalana recorded a retranslation loss of P45 million.
This is largely attributed to the Namibian, South African and Lesotho based businesses, which are all South African Rand (ZAR) denominated.
The figure marks a substantial increase compared with the P14 million registered in the corresponding 2017 period.
This is said to be because as at the reporting period, the ZAR and Namibian Dollar had weakened considerably, but have both started recovering.
Despite suffering such losses, Sefalana managed to exceed the P2.5 billion turnover threshold, generating profit before tax of P103.6 million for the six-month period.
This represents an impressive 25 percent increase compared to the same half-year period from the previous year.
Just like in the past, the bulk of the turnover and profits came from Botswana operations, with Sefalana Cash and Carry contributing 55 percent and 23 percent of revenue and profit before tax respectively.
Turnover was P1.4 billion, which is a 16 percent increase on the previous period.
At the beginning of the financial year, Sefalana operated three Hyper stores, 26 Cash & Carry stores and 26 Supermarket stores, giving it a total of 55 stores in Botswana.
The number is expected to increase soon as the group has revealed plans to expand its manufacturing business and open a number of new retail stores in the coming 12-18 months.
This is anticipated to create an additional 600 jobs.
Sefalana is also looking to launch a new division, ‘Sefalana Catering’ in the ‘next few months’.
It is believed the division will focus on frozen foods and target the hospitality industry.