Engen Botswana Limited’s profits┬áplunged┬áheavily┬áas it failed to┬ámake gains on inventories┬ádue┬áto increasing supply costs┬áprompted by labour┬á┬á instabilities in neighbouring South Africa.
The  sole Botswana Stock Exchange  listed petroleum entity was  unable to benefit from  its inventories while  it was  under pressure from  supply  cost  that  went up by as much as tenfold during its six months to  September 30, this year.
“The┬áfinancial year started with┬áTransent┬ástrike in South Africa, the major source of fuel supply into the company and the country, which severely affected product supply. In the same period,┬ácharges at some of Transent┬áfacilities went up 10 fold, thereby increasing┬ásupply costs┬áwithout┬áa corresponding┬áadjustment in cost elements in the price build up,” the company said.
“As stated, turnover increased 32 percent. However, operating profits is 40 percent down on prior year at P 38 million due to uncontrollable┬á movement in inventory revaluation,” it added.
In 2009, the company recorded an inventory gain of P 15 million compared to just under P 1 million this year. Last year it gained on price swings as the international crude oil prices remained unstable pushing the pump prices to higher levels.
It said Transent charges significantly affected the group results but remained confident that the charges will be shaved starting from this month.
Further, it praised┬áBotswana government’s bold decision┬áthat made sure that the impact of┬ásupply disruption┬áin South Africa┬ádid not negatively affect the┬áeconomy.
“Botswana government has resolved to ensure that┬áthe economy is not adversely affected by supply disruptions in the transit countries and is working to pilot┬ásome alternative┬ároutes and committing resources to┬ásustain supply through these alternatives,” it said.
Government and the private sector have embarked on some ambitious plans to build rail line that will connect Botswana with Mozambique in the east and Namibia in the west. That will reduce the heavy reliance on the South African ports.
Further, the company is in an expansion gear as it opened two Corner Bakeries to bring the total to six. The other six stores will be opened in the second half of its fiscal year.
 Earnings for the period stood at 16 thebe and it also declared interim dividend of eight thebe per share that will be paid to shareholders registered by November 26, this year.
