Choppies full-year profit jumps, eyes regional expansion
Botswana retail giant, Choppies Enterprise, doubled headline earnings per share in the year to June after reporting sales growth across it's Africa regions. Operating profit also showed some growth to the tune of a 20 per cent increase but the retailer is holding back a dividend for another reporting period. Joining CNBC Africa for more is Ram Ottapathu, CEO, Choppies.
Wed, 21 Sep 2022 16:11:03 GMT
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AI Generated Summary
- Choppies Enterprise reports doubled headline earnings per share and 20% operating profit growth for the year, driven by African market expansion and improved gross profit margins.
- The decision to withhold a dividend aims to address historical losses, support business expansion in Zambia and Namibia, and achieve sustainable growth in key regions like Zimbabwe.
- Future plans include opening new stores in Namibia, Zambia, and Zimbabwe, with all segments of the African operations showing profitability, signaling a positive trajectory for Choppies Enterprise.
Choppies Enterprise, a retail giant based in Botswana, has reported a significant increase in headline earnings per share for the year ending in June. The growth has been primarily driven by the African region, including Botswana, with operating profits also showcasing a notable improvement, up by 20%. Despite the positive financial results, the company has decided to withhold a dividend for the current reporting period. Ram Ottapathu, the CEO of Choppies Enterprise, joined CNBC Africa to discuss the financial performance and strategic decisions of the company. Ottapathu highlighted that the decision to retain earnings was based on the need to address previous losses, particularly in markets like South Africa, and the requirement to expand the business in Zambia and Namibia. By reinvesting and recapitalizing the company, Ottapathu assured shareholders of better prospects in the future.
The financial results have been well-received by the market, with Choppies' stock price showing a 12% increase since the start of the year. Revenues surged by 13%, retail sales recorded a similar growth rate, and the gross profit margin improved significantly. Ottapathu reiterated that shareholders' interests were being considered in the decision to retain earnings for strategic purposes.
When questioned about the resolution of historical issues affecting the company, Ottapathu reassured investors that the losses attributed to previous years had been addressed comprehensively. He pointed out that the South African operations had managed to recover from previous losses, indicating a positive outlook for the future. In contrast, the CEO highlighted that the Zimbabwean segment had performed well during the financial year, with profits generated in the region being reinvested to sustain growth.
Looking ahead, Choppies Enterprise plans to expand its presence in Namibia, Zambia, and Zimbabwe by opening new stores in the coming year. Ottapathu disclosed that the company aims to add seven stores in Namibia, five in Zambia, and three or four in Zimbabwe, marking an expansion strategy across profitable segments in the African operations. Additionally, Ottapathu highlighted the profitability of all segments, signaling a significant milestone for Choppies Enterprise.
Despite the challenging economic conditions in Zimbabwe, Ottapathu explained that the hyperinflation environment had actually contributed to improved revenues for the company. As economic indicators began to stabilize in the region, Choppies Enterprise remained focused on reinvesting profits locally and ensuring self-sustainability in Zimbabwe. The CEO expressed optimism about the growth prospects in the country, emphasizing the company's commitment to leveraging its success in the region.
In Botswana, the main market for Choppies Enterprise, Ottapathu acknowledged the competitive pressures facing the retail sector. While the company reported positive results in terms of revenue, Ottapathu highlighted inflation and consumer price pressures as challenges impacting net profit margins. Despite these obstacles, Ottapathu remained optimistic about the company's performance in Botswana, emphasizing the resilience of the business in navigating economic uncertainties.
Addressing inquiries about the company's former presence in South Africa, Ottapathu confirmed that Choppies Enterprise had divested its operations in the region. Regarding the possibility of reentering the South African market, Ottapathu deferred to the board's decision-making process, indicating a cautious approach towards future expansions. As the company focuses on consolidating its current operations and driving growth in key African markets, Ottapathu's strategic vision aims to capitalize on profitable opportunities while maintaining financial stability and sustainable growth for Choppies Enterprise.