Sefalana Holding Limited, the giant retail company, issued warning bells to the market saying┬á all its group of companies have done a sterling job in their areas of operationsÔÇöa move that will ┬áadd significantly to its earnings.
The company is currently in a closed period and the full year results are expected to be released by the end of this month.
“Sefalana Cash and Carry Ltd expects that for the year ended April 30, 2009, net income before tax will be more than 80 percent higher than the previous comparable period. Accordingly, earnings per share are expected to exceed 195.5 thebe (at full year 2008 stood at 108 thebe),” the company said in its profits warning.
Last year, the company’s sales shot up by 32.4 percent to P 781 million┬áwith gross profit up 31.5 percent to P 753 million and gross margins┬ástood at 3.5 percent.
According to Stockbrokers BotswanaÔÇöthe brokerage firm ÔÇô Sefalana Cash and Carry is beginning to┬áget the rewards of breaking away from┬áa controversial relationship with its former partner Met Cash of South Africa.
The relationship between the two ended after a dispute over the management control that was tightly held by their South African counterpart.
“A company in which Sefalana has a 49 percent interest and management control has been granted a concession to operate a household and liquor store in Orapa. This is a positive development given that trading in Orapa is restricted, hence less competitive,” Stockbrokers Botswana said, adding that the company has opened some new SefTim┬áin a bid to widen its product offerings in the country.
Sefalana’s┬áresults are said to be boosted by a raft of factors, including the sterling performance by┬áFoods BotswanaÔÇöa division which supplies government with Tsabana and fortified pre-cocked mealie meal and samp.
“In May 2008, Foods Botswana was┬ágiven a full allocation of Tsabana tender which is worth P 57 million. The company was also awarded a P 29 million tender for maize and P 8 million for samp,” Stockbrokers Botswana, said in its research note┬á that was released in March this year.
As part of the move to diversify its portfolio, the company has also embarked on the sale of branded products in all of its 29 outlets in the country.
“Companies within the MF Group (Merchandised Farming) have traded exceptionally well due to success with government and commercial tenders.
Commercial Motors has done particularly well and has been successful┬áwith government tendersÔÇöthe company has sold the highest units since its inception.
“Merchandised Farming has also benefited from the increase in farming and construction. The company has won a tractor tender worth P 15 million. This is expected to have a positive effect on FY 09 revenue and profitability,” Stockbrokers said.
Sefalana is said to be in the process of turning around KSI, a company in which it has 50 percent interest but is understood to be faced with the problem of shortage of raw materials.
“The property portfolio continues to perform well and in line with the management’s expectations. Twenty-eight of Sefcash stores are housed in Sefalana’s properties, with Parmalat occupying the former Dafin Sales buildings. The company is also at an advanced stage of acquiring┬áa prime property in Zambia, which could be used for the expansion of the Sefcash into the region,” Stockbrokers Botswana said.
