Choppies remains alert to economic uncertainties
Choppies will approach the future cautiously, as doubts on economic recovery remain on the radar. With a presence in Botswana, Zimbabwe, Namibia and Zambia, the company’s latest financial results for the year ended 30 June 2021 indicates that its operations especially in Botswana were affected by COVID- 19.
Despite the pandemic denting operations, Choppies has achieved its first profit since 2016, to restructuring of the business and exiting underperforming investments. “We expect continued uncertainty in our business and the Southern African economy due to the duration and intensity of the COVID- 19 pandemic, the duration and extent of economic stimulus, timing and effectiveness of global and regional vaccines, and volatility in employment trends and consumer confidence all of which may impact our results. “However, we do not expect any effects on our logistics networks or expect any supply chain disruptions due to the recent civil unrest in South Africa,” said Choppies Chief Executive Officer, Ramachandran Ottapathu.
Though Choppies trimmed other investments, the group revenue decreased by 1.7 percent to P 5 331 million compared to 5 421 million in 2020 mainly as a result of negative volume growth in Botswana due to the impact of the COVID- 19 pandemic on the economy and consumer spend. “Despite volumes reducing by 5.8 percent, revenue from Botswana declined by 2.7 percent as the business continued to show strong resilience in an increasingly competitive operating environment and poor trading conditions. “Operating limitations due to government regulations and precautionary measures taken because of the COVID- 19 pandemic, resulted in a lower gross profit margin of 22.9 percent compared to last year’s 24.4 percent,” said Ottapathu. This week, Minister of Investment, Trade and Industry, Mmusi Kgafela, warned that the fight against the COVID- 19 pandemic is not over, despite the country moving out of the State of Emergency ( SoE).
“As the state of emergency comes to an end, COVID- 19 still remains a challenge and this requires concerted efforts by all stakeholders to contain the virus,” said Kgafela.
He said businesses will be expected to continue to comply with good hygiene practices.
The Minister said the hygiene measures will be undertaken in consultation with relevant stakeholders, including the Director of Health Services.
“The war is not over and the Ministry will continue this engagement with a view to resuscitating the economy, while minimising the spread of the virus,” said Kgafela.
On the other hand, the Choppies’ position remained relatively healthy despite the extremely challenging trading conditions. “The rest of Africa revenue increased by 2.2 percent to BWP 1 186 million compared P 1 160 million in 2020 driven by inflationary increases in Zimbabwe and Zambia which were further offset by negative fluctuations in currency exchange rates,” said Ottapathu.
Choppies remains the largest grocery retailer in Southern Africa, outside of South Africa.