But volumes down 5.8% in Botswana
Fast moving consumer goods (FMCG) giant, Choppies Enterprises Limited, has achieved its first profit since 2016 as benefits from restructuring the business continue to be realised, Group CEO, Ramachandran Ottapathu, has said.
The company registered a profit tax of P59.6 million in the full year that ended 30 June 2021, shrugging off losses of its troubled times. But Choppies revenue decreased by 1.7 percent to P5.3 billion (2020: P5.4 billion) which Ram, as Ottapathu is affectionately known, attributed to negative volume growth in Botswana due to the impact of the COVID-19 pandemic on the economy and consumer spend.
According the CEO, Choppies has managed its cash resources and liquidity prudently over the course of the COVID-19 crisis, with a reduction of P55.4 million in net debt, including debt disclosed in 2020 under discontinued operations. Ram said because volumes were down by 5.8 percent in Botswana, revenue from the country declined by 2.7 percent in an increasingly competitive operating environment and poor trading conditions.
“Operating limitations due to government regulations and precautionary measures taken because of the COVID-19 pandemic resulted in a lower gross profit margin of 22.9 percent compared to last year’s 24.4 percent,” he said. “The gross profit margin remains relatively healthy despite the extremely challenging trading conditions. Operating expenditure was well controlled, reducing by 8.8 percent, which helped negate some of the declines in EBIT from P259.5 million to P246.1 million. One store was closed during the year, bringing the total number of stores in Botswana to 90 stores (2020: 91 stores).”
Choppies is a Botswana-based investment holding company operating in the retail sector in southern Africa. Dual-listed on the Botswana Stock Exchange (BSE) and the Johannesburg Stock Exchange (JSE), its operations are food and general merchandise retailing, as well as financial service transactions supported by centralised distribution channels through its distribution and logistical support centres.
Choppies, which is the largest grocery retailer in Southern Africa outside South Africa, has 154 stores under four formats in four countries and employs over 9 000 people.
Analysing the Rest of Africa, a segment hat consists of six stores in Namibia (2020: five stores), 26 in Zambia (2020: 22 stores) and 32 in Zimbabwe (2020: 32 stores), Ram noted that revenue increased by 77 percent in constant currency and 2.2 percent in Pula terms because of negative fluctuations in currency exchange rates. “The Rest of Africa constant currency growth was driven by hyperinflation in Zimbabwe and double-digit inflation in Zambia,” he noted.
“The gross profit margin at 20.1 percent (2020:18.2 percent) improved due to inflationary increases in pricing in Zambia and Zimbabwe. Total costs were well-managed reducing by 2.5 percent. The segment has shown a significant decline in EBIT losses to P19.9 million (2020: P51.5 million loss) owing to improved gross profit margin and a reduction in costs.”