GABORONE - Operating profit and profit after tax have declined substantially as Botswana Stock Exchange (BSE) listed Sechaba Holdings got hit by economic recession and the 30 per cent alcohol levy.

Launching the interim results for the half year ended September 30 this year, Sechaba managing director, Mr Lehlohonolo Matsela said operating profit declined by 29 per cent leading to P116 million during this year down from P162 million recorded during the same period last year.

Profit after tax declined from P130 million to P90 million and the company earnings per share were not spared either as they went down by 31 per cent to 38 thebe from 55 thebe and the company declared dividends at 37 thebe per share while last year it declared 51 thebe.

Sechaba, which partners with Kgalagadi Breweries Limited (KBL) and Botswana Breweries Limited (BBL) experienced low volumes of trade with lager volumes going down by 34.8 per cent compared to a positive growth of 16.9 per cent when compared with the same period last year. The volumes of other KBL products also declined by 56.5 per cent from a growth of 21.2 per cent and traditional beer (Chibuku) also dropped by 13.7 per cent from 15.5 per cent recorded in the corresponding period last year as its sales dropped by 14 per cent.

Overall the volume of KBL dropped by 28 per cent and Mr Matsela said that they managed to export 24.27 khl of beer and 28.15 khl of soft drinks during the first six months with the Democratic Republic of Congo and Zambia being a major market for beer and Zimbabwe a destination of soft drinks.

The managing director said exports were free from alcohol levy and said although they were able to export they were not consistent especially as countries were moving towards import substitution.

Due to the 30 per cent alcohol levy and recessionary economic conditions, beer volumes declined by 35 per cent, Mr Matsela said.

As mitigating factors, he said they introduced a new local premium beer named St Louis Export to supplement the existing premium portfolio and this resulted with premium beer share going up by six per cent.

The 750ml returnable bottle share grew beyond expectation to 30 per cent during the period under review. Mr Matsela said the bottles have been a hit with the local consumers saying they only pay for contents inside the bottle but not packaging hence they are affordable.

St Louis remains the dominant brand in the product portfolio at 41 per cent share followed by Carling Black Label at 22 per cent.

The performance of sparkling drinks was affected by the harsh weather conditions, and Mr Matsela said usually during winter seasons their sales go down.

However, volumes grew by four per cent in spite of unusually cold weather conditions and adverse economic conditions, and the two liters drink has also proved to be a hit among consumers as it grew to 25 per cent from 21 per cent driven by the supermarket channel.

Returnable glass bottles share grew to 10 per cent and KBL commended the FIFA World Cup trophy tour promotion under the Coke brand. During the period, two new packs were introduced, a new 500 ml bottle and a 1.25 litre returnable bottle, replacing the one litre pack.The company has undertaken several corporate social responsibility (CSR) projects including political parties funding which Mr Matsela said was done in an open and transparent manner. He said he hoped the funds were responsibly used as intended.

Among other CSR projects, the company launched Talking Alcohol.com aimed at educating consumers about the dangers of alcohol abuse and has continued with Kickstart programme which started as a pilot project five years ago. Going forward, Mr Matsela said they expect trading conditions for alcoholic products to remain tough during the second half.

Economic recovery along with increased government spending on infrastructural projects and favorable weather conditions are expected to stimulate economic growth during the second half. BOPA