[2007-05-25]  Economic Recovery Boosts Sechaba Fortunes
Sechaba Breweries Holdings has put a smile on the faces of its shareholders with a set of improved results powered by recovery in the economy that had taken a knock from 2005 currency devaluations.

The Group has declared an after-tax dividend of 19thebe per share.
Sechaba, which is a parent company to Kgalagadi Breweries Limited (KBL) and Botswana Breweries Limited (BBL), posted results that reflected a P1 billion turnover for the full year ended March 2007. The turnover is a 10 percent improvement on the P980 million registered in the full year to March 2006.

The Group's Managing Director, Lehlohonolo Matsela, says the results were supported by the economic recovery Botswana realised in the second half of 2006, which he described as "real".

"Given the economic cycle we are coming from, (this is an) incredible set of results," Matsela told journalists at a press conference held at the Group's Coca Cola plant in Gaborone Monday. He also attributed the results to the quality of drinks the company produces, such as Carling Black Label beer.

He said Black Label was given 9.9 points out of 10 in March and 10 out of 10 in April this year by SABMiller beer tasters, who are based in Johannesburg, South Africa:

"This is an achievement to be proud of as neither score had ever been achieved by SABMiller before." The results are a change from the negative growth that was registered in the full year to March 2006 where KBL had a turnover growth of negative 12 percent while BBL registered negative 5.7 percent.

In the current results, KBL registered a growth of 1.2 percent while BBL - supported by Chibuku beer - grew by 9.2 percent. The Botswana consumer economy took a knock from a spate of devaluations in 2004/5 that amounted to about 19 percent as the country moved to avoid budget deficits by boosting revenues from traditional exports.

Botswana's exports, mainly diamonds and beef, were becoming uncompetitive as the country was not making enough money from Pula terms, which was appreciating against the US dollar.

However, the move to devalue the Pula hit hard on consumers who lost their purchasing power, prompting beer drinkers to shift to traditional beer, mainly BBL's Chibuku.

Meanwhile, African Alliance Botswana analyst Pulafela Isaacs has corroborated Matsela's view that Sechaba results are "in line with our expectations of a recovery."

"It is quite apparent that the 2H07 (second half of 2007) performance has surpassed that of the 1H07, as well as that of the corresponding period last year. This was driven by the general improvement in the economy," Isaacs said. "In March, inflation dropped to 6.3 percent, (which was in line with) the Bank of Botswana's target of 4-7 percent. This has eased the downward pressure on disposable income."

At the back of the results, which saw the Group's after-tax profits jump by two percent from P123 million to P126 million, a dividend of 19thebe per share has been declared.

Copyright © 2007
Source: Copyright © 2007 Mmegi/The Reporter.