CA Sales Holdings Limited (CAS.bw) 2021 Annual Report
In addition to the broader economic impact of the pandemic and its knock-on effect on CA&S, we were also directly impacted by the temporary closure, in some instances, of entire departments due to positive tests in the workplace, with many employees having to adapt to working from home. In our business, this is far from ideal but the CA&S team has done well to reposition itself and to continue to deliver to customers. I maintain that if it was easy, everyone would do it. Our team has done exceptionally well.
The human impact of the pandemic was brought home to us again during 2021 with a further three colleagues being sadly lost to COVID-19 during the year. Our thoughts and prayers are with the families of these employees and also with our other employees who may have lost family members to the pandemic.
Given our substantial workforce of about 11 000 people, CA&S tackled COVID-19 primarily through education on the disease, providing the necessary PPE and making vaccines easily available.
A positive outcome of the pandemic has been that CA&S has become more efficient and cost-effective. The crisis compelled us to reconsider in detail and a fundamental level the value and cost of everything that CA&S does and to eliminate what is unnecessary. This was an exacting and, at times, uncomfortable exercise, but CA&S is a better business today because of it.
Thankfully, towards the end of 2021, most restrictions on movement and trade were lifted as hospitalisation rates reduced significantly across those countries in which we operate. Although overall vaccination rates in our trading economies remain low compared to those in developed countries, it seems that local communities may be benefitting from increased levels of natural immunity, arising through one or more bouts of infection. We anticipate that most of the remaining restrictions in the countries where we operate, will come to an end in 2022, unless a particularly dangerous mutation like the Delta variant should appear. Nevertheless, we should remain vigilant and continue to strongly encourage vaccination to ensure, as far as possible, a safe working environment and customer interaction.
That said, COVID-19 has permanently changed societies in ways that we are only beginning to understand. In the CA&S context, we are closely monitoring consumer and retail trends to assess how these may impact on our businesses.
There is no doubt that consumers are under financial pressure. They are trading down in categories by, for example, purchasing cheaper toothpaste and shampoo, as part of a distinct migration to private label offerings. We are seeing a major shift as private label items improve in quality and range, with private label items already making up about 20% of the present South African consumer basket. The pandemic persuaded many consumers to avoid the crowds that congregate in large flagship malls and ‘hypermarket’-sized stores.
Smaller and regional stores are reaping the benefit as shopper volumes diminish in the mammoth outlets. This trend is unfolding in tandem with a swing towards online ordering through market-disrupting apps such as Checkers 60Sixty and Woolies Dash. The swiftly increasing numbers of delivery scooters on South Africa’s roads show that trend to have considerable traction Operating environment.After the severe impact of the pandemic in 2020, the 2021 year featured rising commodity prices and reviving global trade, with widespread rains across sub-Saharan Africa yielding bumper crops in several food commodities.
On the downside, the world appears to have entered an era of rising interest rates fuelled by an aggregation of factors, with price inflation and erratic global supply chains as the main drivers. As the cost of money goes up, certain brand-owner clients are introducing price increases that are not well received by retailers and cash-strapped consumers.
The current war in Ukraine and its various potential outcomes can impact CA&S’ business along several fronts, including inflation, access to commodities and security of supply. The challenge for us for 2022 is to evaluate these realities and mitigate their impacts on our business.
In our specific markets, and despite a sharp 8.6% improvement in Botswana’s GDP in the twelve months through September 2021, Botswana still saw unemployment increasing to 24.5%. CA&S fortunately benefited from a healthy 11.4% growth in the wholesale and retail trade industry, which took pole position as Botswana’s most significant commercial sector. As global trade and commodity demand revives, the Ministry of Finance and Economic Development predicts that Botswana’s GDP growth will moderate to 4.3% in 2022.South Africa and Eswatini were the hardest hit as both countries were afflicted by internal unrest and unprecedented rioting.
South Africa’s GDP fell by 6.4% in 2020, but rebounded by an unexpected 4.9% in 2021, despite the unfortunate KwaZulu-Natal and Gauteng riots of July 2021. If Eskom – South Africa’s primary power producer – can keep the lights on in 2022, the country is on track for further healthy recovery, though with slower growth than the 2021 rebound.
In the first half of 2021, Eswatini’s GDP bounced back strongly, supported by US$ 8 million in World Bank and IMF funding. This promising performance was derailed to a degree by a fuel supply crisis in July and civil protest against the absolute monarchy of King Mswati III. GDP growth is expected to slow in 2022, driven by the slowdown in the economic growth of its main trading partner, South Africa.
As a tourist destination and semi-arid country that is heavily reliant on unpredictable rain, Namibia has been hit hard by COVID-19 and a recent severe drought that restrained economic activity and increased unemployment levels. While most of the country’s dams are now more than 80% full and the Swakop river flowed into the Atlantic Ocean for the first time in over a decade, large parts of Namibia still require disaster support.
Under fresh political leadership, Zambia is recovering slowly from a perilous financial position in 2020. Food and price inflation have soared in recent years, but rising copper and other commodity prices are expected to enable liquidity to start flowing back into the country.
Like Namibia and Eswatini, Lesotho has been heavily constr