E-Malt.com News article: Botswana: Sechaba Brewery profit margins continue to stabilize in FY2011

Sechaba Brewery Holdings Limited seems to be heading away from red as profit margins continue to stabilize, The Bostwana Gazette communicated on August, 20.

According to the 2011 annual report profits before tax went up by P9 million from P276 million in the previous year. This is despite facing two of the greatest challenge since its inception - the alcohol levy and the recession in 2008.

The chairman, Mr Komanyane’s statement to shareholders reads: “Beer sales volumes continued to remain under pressure for most of the year due to differing calculation methods of the 30% alcohol levy, which favoured importers of alcoholic products.”

He said since the December 2010 increase of the levy to 40%, calculation re-adjustments have levelled the playing field, which has improved the situation as their clear beer fell less compared to the year before, “Volumes fell by 0.2% in 2010-2011 in comparison with the 26% decline registered in the prior year, and more than 35% drop since the levy was implemented.”

Komanyane referred to new regulations that would see the closure of home-based taverns, a profound threat to their Chibuku product. “The impending enforcement of traditional beer regulations, which will confine the sale of Chibuku to commercial zoned licensed premises, poses the biggest threat to the wellbeing and future survival of Botswana Breweries (Pty) Ltd,” he noted.

Since more than 80% of Chibuku beer sales are from home based retailers, government ought to give the industry more time to “facilitate a seemless relocation of home sale business to commercially zoned areas, thereby minimising disruption to both the Chibuku business and the retailers, who depend their livelihood on its sales,” Komanyane said

Going forward, the company foresees difficultly under the current regulatory environment. Nonetheless, optimism remains, especially in the non-alcoholic section of the business.
Sechaba share prices on the BSE finished the week 0.6% up, continuing its impressive run.


19 August, 2011