Brewers of Chibuku and St. Louis Larger posted depressed half-year financial results and said trading conditions will remain grim in the face of soaring Alcohol Levy.
Listed on the Botswana Stock Exchange, Sechaba Holdings Limited is the leading beer and opaque traditional brew maker. The group's unaudited second half financial statement for the period ended recorded subdued volumes, down by two percent when compared to the same period in 2011.
Latest regulations (effected July) bars the sale of Chibuku from residential areas. Until recently, more than 80 percent of Chibuku was sold in residential areas.
Sechaba, which owns Botswana Breweries Limited (BBL) and Kgalagadi Breweries Limited (BBL) said sales are down by 2 percent, but measures are being taken to ensure they remain profitable despite impediments. “The full effect of the regulations will be felt when the company releases final results next year. It’s going to be tough for the company,” explained Karabo Tladi an analyst at IPRO Botswana.
It was not all gloom, as Sechaba managed to increase sales in other divisions. Keone Mooka Mageu, which has not been affected by the new regulations, increased sales by a whopping 60 percent. Source water, also reported strong sales reaching 22 percent.
Source is produced by KBL. While sales have dwindled, Managing Director Hloni Matsela said in a statement that turnover has increased by double digit to P848 million (2011:727 million.
Profit After Tax (PAT) for the period under review reached P121, 8 million from P113 million in 2011. Botswana Development Corporation, the embattled investment arm is a majority shareholder in Sechaba with over 34 million shares, which translates into 25.5 percent. South African titanic brewer, SABMiller Africa BV holds 16.8 percent, while FNB (Nominees) hold around nine percent or six million shares.
The Alcohol Levy did not favour Broadhurst-based company, as it was losing market share to foreign company especially Namibia. Meanwhile, Matsela, whom sources say has been forced to stay as a replacement for him is yet to be found, pointed out that operation costs shot up in the period under review.
“Higher fuel costs as a results of the increase in the oil price and further investment in the returnable bottles continue to drive distribution costs,” he said in a statement seen by Botswana Guardian. Government has hiked petrol prices four times and increased Alcohol Levy by 45 percent.BBL is also struggling to find suitable land for its beer gardens.
According to spokesperson Mokoro Ketsitlile, the group has P10 million which they will spend on beer gardens, but the process is faced with challenges, while law enforcers still continue to charge those selling Chibuku in unlicensed areas.