In a period characterised by high alcohol levy and recessionary pressures, Sechaba Holdings Limited this week presented punched results that showed the two events nearly took the BSE listed company on its knees.
However, the holding company of two local breweries, KBL and BBL, said it was saved by diversified portfolio that includes clear, opaque beer and soft drinks.
“This is the benefit of a wide range of portfolio to cater for drinking patterns. Otherwise, the results would have been worse,” said Hloni Matsela, the group Managing Director of Kgalagadi Breweries Limited.
The results for the year ended 31 March 2010 showed that turnover went down 15. 8 percent from P1.4 billion to P1.1 billion.
Profit after tax was down 24 percent from P288 million in prior year to P217 million.
However, through the group’s diversified product portfolio, the soft drink division was able to save the clear and traditional beer units.
Clear beer volumes were down 26.2 percent compared to prior year of 0.5 percent while the traditional beer was down 7.5 percent.
Opaque beer sales declined by 7.8 percent on prior year despite Chibuku being the dominant drink in the market where traditional brewers including United Breweries collapsed that had given BBL competition.
In all, KBL alcoholic beverages volume declined by 35 percent.
Matsela said the sparkling soft drinks grew by a modest 2 percent compared to a growth of 20 percent in the prior year blaming it on unfavourable weather conditions.
Of all the soft drinks, Stone Ginger Beer recorded the highest volume growth of 9.3 percent followed by Fanta at 8.5 percent.
Coke continued to be the dominant brand contributing 52 percent to soft drinks.
Said Matsela on the performance of Stoney Ginger Beer: “That is the diversified portfolio we are talking about. When other products are affected by the levy and others are not.”
In all, KBL’s after tax profits declined by 34 percent while it was the same thing for BBL where after tax profits declined by 3.8 percent.
Earnings per share for the group (Sechaba) declined from 122 thebe to 92 thebe or 24.6 percent.
Despite the challenges, Matsela said they will go ahead with initiatives like Kick-start and will continue the recently launched pilot for Project Thusanang.
Project Thusanang is targeted at assisting small farmers supply the brewery with available raw materials in the country.
The Kick-start programme, running into its fifth year, has received 3000 entries and top four entrepreneurs and granted seed capital worth P344 000.
It is an initiatives programme aimed at helping budding entrepreneurs find their feet.