Exchange rate differential between ZAR and BWP led to forex losses that CA eventually recovered from
The restriction on alcohol sales for an extended period during 2020 negatively impacted the financial performance of CA Sales Holdings for the year, Chief Executive Officer (CEO) Duncan Lewis has stated.
According to Lewis, the uncertainty during Quarter 2 specifically resulted in the weakening of the South African Rand against the Botswana Pula, resulting in significant foreign currency losses in the Botswana businesses.“This has partly been recovered during the second half of the year,” he said. “The group reported a R13 million (2019: R3 million) forex loss at year-end.”
Despite the aforementioned circumstances, Lewis stated that CA Sales performance was satisfactory. “The majority of the group’s products and services are classified as essential, which ensured continued trading during the COVID-19 pandemic, albeit challenged by regular manufacturer supply chain disruptions and delays at border crossings,” he said.
This is the company whose revenue increased by 11.2 percent to over R7.9 billion in the year under review despite trading restrictions, supply constraints and sporadic, unpredictable buying patterns from end consumers triggered by uncertainty during the pandemic. “Due to shifts in the shopper product mix, the gross profit only increased with 6.1 percent on the prior year to R1.1 billion,” Lewis stated.
CA Sales, which trades and CA&S, recorded a decline in other operating income that Lewis said was due to a once-off settlement fee of R56 million received in the prior year from the acquisition of customer contracts. Net profit after taxation of R230.6 million, on the other hand, showed 10.7 percent growth on the prior year. “The group’s action plans to ensure sustainability of the businesses and job security for its employees included cost reductions and the utilisation of the respective geographies’ government incentives,” Lewis said.
The year under review was nevertheless not that bad for CA Sales as it acquired 47 percent of a group of companies named Mac Mobile in May 2020. “This group has operations in South Africa as well as in the rest of Africa,” Lewis disclosed. “The Mac Mobile group provides clients with end-to-end, cloud-based FMCG value-chain information technology solutions and this will enhance our service offering to our clients.”
CA Sales also increased its shareholding in Promexs Limited, a merchandising and promotions business in Zambia, from 35 percent to 60 percent in November 2020.
CA Sales total assets increased by 5.9 percent to R3.3 billion in the year under review. Stockholding increased compared to the prior year due to the trade restrictions on alcohol sales before the year-end. Cash balances increased as a result of increased sales and a cautionary approach to capital investment. The higher BWP/ZAR exchange rate at year-end also contributed to the increase in the rand value of the total asset.
Lewis further stated that the duration of the challenging economic environment and difficult trading conditions is still uncertain. “However, the group is well positioned with a strong balance sheet and a diverse geographical presence across southern Africa,” he said. “The group’s diversified portfolio should enable it to deliver sustainable results for the foreseeable future.”
CA Sales operates within the Fast-Moving Consumer Goods industry and delivers route-to-market services to blue-chip manufacturers. The service offering includes selling, merchandising, warehousing, distribution, shopper promotions, training and debtor’s administration. The group has a diverse geographical presence across southern Africa, operating in Botswana, Lesotho, Mozambique, Namibia, South Africa, Swaziland, Zambia and Zimbabwe.