Sechaba Brewery Limited, the listed holding company to Kgalagadi Breweries Limited says it remains positive about the future despite a host of challenges including Botswana government’s continued adjustment of alcohol tax or alcohol levy. The company has also defied tough trading environment to release solid results.
The group Managing Director for KBL/ BBL, Johan De Kok said at the presentation of the company’s results for full year ended 31, March, 2013 that there are still impediments as the opaque division is struggling to find land to relocate displaced traditional beer dealers.
“Looking ahead, the trading environment for alcohol related is expected to remain challenging as the impact of the high levy is felt by consumers,” said De Kok.
Government increased the alcohol levy by 45% in October 2012, which forced the group to pass the costs to the consumers. Equally, traditional beer regulations were implanted on July 2012, which led to volumes falling.
KBL has allocated P10 million help dealers set up, but land still remains a challenge. “BBL is struggling to invest in beer gardens as land availability continues to be a challenge”. About 57 employees are also expected to lose their jobs when the Palapye Opaque plants shuts down as the last option to deal with the declining “volumes below breakeven point”.
“Efforts will be made to try to absorb as many of the affected employees as possible at both the KBL Opaque and Clear Beer sites across the country,” KBL said.
“This process is currently on-going and the final headcount for those who may ultimately have to exit the business will be communicated to the relevant stakeholders. Recently, consultations have taken place with Union representatives as well as employees at the Palapye Brewery [who also played a critical role in trying to turn the situation around over the term]. In the past KBL has repeatedly raised concerns it could not rule out the possibility of job losses as a result of the Traditional Beer Regulations and their impact on the opaque side of the business.”
However, despite challenges, Sechaba continues to grow its revenues as its top line grew by 11.6 percent from P1.56 billion on the prior year to P1.7 billion mainly attributed to cut in costs. Profit after tax increased by 17.4% from P280.6 million in the corresponding period to P329.4 million.
The company said administration and operating expenses increased by 23.5% due to an increase in pay cost as salaries were increased above inflation and amortisation of containers. Equally, distribution costs were up as fuel prices continued to increase as a result of high oil prices.
Sechaba has declared a net fourth and final dividend of 18 thebe in respect of the quarter ended 31, March 2013.
BBL has been amalgamated with KBL as per Section 224 of the Botswana’s Companies Act on 9 April, 2013. The merging will enhance the operations of the company and it will make it easier for the entity to negotiate better with suppliers.