Tuesday, November 28, 2023

Choppies shareholders should expect dip in earnings ÔÇô Ramachandran

Shareholders of the country’s leading retail group, Choppies Enterprise Limited, should expect reduced Earnings Per Share (EPS) when the company reports on its financial results for the half year (H1) period which ended December 31, 2016. 

Choppies is currently finalising its results for the half year which are expected to be released on the Botswana Stock Exchange and Johannesburg Stock Exchange in mid-March 2017 respectively. 

On Thursday, the group confirmed that the pending financial results will likely show a dip in EPS of as much as 40 ÔÇô 50 percent from the one reported in the previous half year period of 2015. 

“Earnings per share will therefore be in the range of Thebe 4.08 to 4.85 compared to Thebe 8.08 last half year,” Ramachandran Ottapathu, Chief Executive Officer of Choppies, said in a trading statement released to the capital markets late last week. 

At the same time, the group’s projections shows that its Headline Earnings per Share (HEPS) will also record a slowdown of between 30ÔÇô40 percent from the HEPS reported for the half year ended December, 31, 2015.

“HEPS earnings per share will therefore be in the range of Thebe 4.08 to 4.85 compared to Thebe 6.84 last half year,” added Ottapathu. 

According to Ottapathu, the group results were negatively affected by trading losses in new regions namely Zambia, Kenya and Tanzania. Despite difficult trading conditions in South Africa, focussed attention resulted in an improvement with losses narrowing compared to 2016. 

Ottapathu said that the Zimbabwean segment, despite very difficult economic conditions, returned to profit. On the other hand, the Botswana results were affected by the Rand strengthening against the Botswana Pula. 

In H1:2015, Choppies Zimbabwe achieved revenue growth of 49 percent. The company indicated then that its profitability was negatively impacted by an aggressive pricing and promotions strategy in new stores, and start-up costs for the eight new stores opened during the period. 

Macroeconomic pressures in Zimbabwe continue to affect the spending power of consumers. In addition, deflationary trends have continued due to the strength of the US Dollar.

Still during the same period, Botswana contributed 64 percent to Group revenues. The sharp devaluation of the Rand continued in the current financial year, putting pressure on Pula-based sales prices. 

However, profitability continued to improve from the scale benefits of our mature infrastructure.


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