Sefalana Holding Company Limited Reports a 21% Increase in Pre-tax Profit: Maintaining and Enhancing Profit Margins Amid Economic Challenges

Published On: October 3, 2023Company: Sefalana Holding Company Limited (SEFALA.bw)
What strategies has Sefalana Holding Company implemented to maintain and enhance its profit margins despite ongoing economic challenges?
Sefalana Holding Company has focused on Fast Moving Consumer Goods (FMCG) businesses, employed strategic procurement, maintained regular dialogue with suppliers, and significantly invested in inventory. This has enabled the company to minimise supply constraints and absorb significant price increases from suppliers, thus keeping end consumer price increases to a minimum. The strong financial position of the company allows it to make strategic business decisions swiftly without needing external funding sources.

Summary of Sefalana Holding Company Limited 2023 Annual Report

  • The company reported new projects aimed at enhancing shareholder value, though some have been delayed due to unspecified limitations.
  • The Fast Moving Consumer Goods (FMCG) businesses have been the main focus, with efforts being made to increase margins and contribute to group results.
  • There is continued margin pressure during inflationary periods, with price elevations being noted from South African suppliers.
  • The manufacturing operations supporting the FMCG businesses have been a key focus area, performing well despite procurement and import restrictions.
  • Sefalana has had the best set of results to date, with a pre-tax profit of P403 million, up 21% from the previous year.
  • Large institutional shareholders hold on to their holdings due to the illiquid nature of Sefalana’s stock, however, the company continues a consistent dividend policy of distributing about 50% of earnings as dividends.
  • Sefalana has been able to maintain and enhance margins despite ongoing challenges through strategic procurement and regular dialogues with suppliers.
  • The company’s financial position remains strong, enabling them to make quick and strategic decisions without needing additional funding.
  • Through significant investments in inventory, the company has minimised supply constraints, processed significant price increases and sustained a consistent product offering to its customer base.
  • They own 123 stores in Botswana including Sefalana Cash & Carry, Sefalana Shopper, Sefalana Liquor, Sefalana Quick, and Sefalana Catering. The average expansion rate is 5 new stores per year.
  • The company’s engagement with customers has been increased through various promotions and the giving away of mobile kiosks to Batswana, allowing them to start their own businesses.
  • The Sefalana Cash & Carry Limited division contributed significantly (54%) to the Group’s revenue and 38% to the profit before tax for the year.

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About Sefalana Holding Company Limited (SEFALA.bw)

Sefalana Holding Company Limited is a leader in wholesale and retail distribution in Botswana. Founded in 1974, the company is one of the largest in Botswana, with a portfolio that includes consumer goods, food-related items, agricultural products and medical and electrical appliances. The company has a presence in the different districts of Botswana and has recently extended to countries such as Namibia, Lesotho and South Africa.

Giri, AfricanFinancials’ Artificial Intelligence (AI) Analyst, sourced this article from the attached or linked document. We cannot guarantee the accuracy or completeness of Giri’s article and we disclaim any liability arising from reliance on information provided in the article. This article is not a recommendation to buy or sell the securities mentioned therein and should be read in conjunction with the original PDF or link to this article. Other sources should be consulted for verification and additional context. Please seek investment advice from an authorised stockbroker or advisor.

Giri

Giri, our AfricanFinancials AInalyst, was born in 2006. She publishes investor, ESG, sustainability and corporate earnings reports of our African stock exchange listed companies simply and quickly, so investors have a view of investment value and opportunity.

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