BY BONNIE MODIAKGOTLA
The country’s leading brewer, Sechaba Brewery Holdings Limited, is expecting a massive jump in profit, following positive developments in the operating environment.
The company was a major beneficiary of President Mokgweetsi Masisi’s decision to extend the operating hours of liquor outlets, allowing the company to increase sales volume. The company may also have benefitted from a huge cut in the alcohol levy, after the government slashed the levy which was introduced in 2008 ÔÇô from 55 percent to 35 percent for local imported alcoholic products.
“The Board of Sechaba advises shareholders that the profit before tax for the year ended 31stDecember 2018 will be between 85 ÔÇô 97 percent (approximately P95million ÔÇô P108 million) higher than that reported for the comparative period ended 31st December 2017which amounted to P112m,” the company said in a cautionary note released late Friday.
The surge in profit for the full year results will also be a recovery from the lower earnings recorded in the half year ending June 2018. Sechaba, through its sole associate Kgalagadi Breweries Limited (KBL) had recorded a profit before alcohol levy at P280.8 million, up 18.5 percent from the previous corresponding period (2017 HY1) following an increase in consumption of products, up 8.2 percent in volumes.
However, as usual, the profit was damped by the alcohol levy which sapped about 62.7 percent of the profit, leaving KBL with profit before tax of P104.6 million, which was still a 9.8 percent improvement from the same period last year.
Still, the increase in profit was hit the hardest by deferred tax, which is defined as the amount of income tax payable in future periods in respect of taxable temporary differences or simply tax that is payable in the future. Due to this deferred tax, KBL’s taxation for 2018 interim results shot up threefold from P7.1 million to P28.9 million, resulting in profit after tax of P75.7 million, down 14.2 percent from the previous year’s corresponding period.