Engen Botswana remained resilient last year in a tough operating market, with the fuel distributor seeking to diversify from relying on households as they come under pressure and pursue commercial channels which also have not been spared from the economic headwinds, said the company this week.
On Friday, Engen Botswana released its full year financial results ended December 2019, which reflected a 15.4 percent spike in revenue, bringing in P2.9 billion. The top line growth was attributed to a three percent growth in volume of fuels distributed in 2019, though the price of fuel was flat last year after the government did not make price adjustments.
While the fuel retailer managed to reduce operating expenses, the company’s after-tax profit came at P129 million, a 1.4 percent increase from 2018’s profit. The slowed profit pace was caused by increase in finance costs and reduction in share of profit of joint ventures.
The demand was driven by the retail channel, made up of individuals, which remains the cornerstone of Engen’s business, with the channel achieving a 9 percent growth in sales volume. However, the fuel distributor says this segment is becoming risky as the country’s diamond and non-mining sectors face pressures that have translated into diminishing disposable incomes, affecting consumer demand for fuel.
“In view of the relative fluidity of the operating environment, we continuously had to realign our business operations to adapt to the changing circumstances so that we continued to deliver the greatest value for our shareholders,” wrote the company board chairman Shabani Ndzinge in the commentary accompanying the latest financials.
Engen noted that it continued to diversify its commercial sales channel so as not to be overly dependent on any one sector of the economy in order to minimise business risks while providing value adding business solutions.
“This channel continued to be highly price competitive and we had to continuously manage the effects of strong price competition in order to remain relevant to the market,” added Chimweta Monga, the company’s managing director.
Engen has assured its shareholders that the global pandemic caused by COVID-19 coronavirus which has affected global markets will not affect its operations that much as they have put in place business continuity plans that will mitigate the detrimental effects of the unusual business conditions as many countries go on lockdown.