Retail giant, Choppies surprised its shareholders by announcing an interim dividend of 160 thebe per share, making its first dividend declared in five years.
Choppies Group Chief Finance Officer (CFO), Minnesh Rajcoomar, confirmed the declaration of an interim dividend for the period ending December 2023. Rajcoomar stated that Choppies is set to distribute approximately P30 million as part of this interim dividend.
This is the first dividend declared since 2017, marking a key milestone in the performance of the Group and the return of value add to shareholders, said Rajcoomar.
“The business is doing well. Our cashflow is in a favorable position to sustain the business. So, we are now in a suitable position to pay dividends,” he added.
The Fast Moving Consumer Goods (FMCG) conglomerate’s strategy of achieving balanced growth and exiting loss-making markets is paying off. Group retail sales grew 23.1 percent to P4.25 billion, which Rajcoomar attributes to the addition of new stores as well as demand for Choppies products.
“We also give credit to improved internal efficiencies, especially in the Botswana market, which is our largest,” he added.
Further, the increase in sales, according to Rajcoomar, was also because of the increase in Choppies’ footfall, which grew by 15.7 percent, and 7.7 percent when excluding Kamoso.
According to the Choppies CFO, each week, approximately 2.3 million customers visit the 282 stores under seven formats in four countries.
Further, earnings before interest and tax grew by 28.4 percent to record P181 million as compared to the P141 million seen during the previous corresponding period.
Rajcoomar said this is commendable because it was achieved despite the challenging economic environment. Taking away Zimbabwe, where growth was negatively affected by the prevailing economic conditions, Rajcoomar stressed that Choppies realised growth in all its markets still.
The Group, according to Rajcoomar performed positively in the midst of a demanding economic environment characterised by economic challenges such as unemployment, all of which continue to constrain consumer spending and the consumer’s ability to digest higher prices.
Choppies recorded P100 million as profit after tax from continuing operations, after a 40.1 percent increase from the P71 million recorded during the 2022 interim period.
“The Group profit margin was maintained despite the dilutionary impact of the lower margin of the Kamoso Group,” he stated.
Listed on the Botswana Stock Exchange (BSE) and the Johannesburg Stock Exchange (JSE), Choppies’ operations are food, liquor and general merchandise retailing as well as milling and manufacturing and financial service transactions supported by centralised distribution channels through distribution and logistical support centres.
On 19 July 2023, Choppies acquired 76 percent of the Kamoso Group for P2.00 (two Pula) and took cession of shareholders’ loans of P22 million. The Botswana Development Corporation (BDC) retained its 24 percent stake. Kamoso was consolidated from 19 July 2023.
According to Rajcoomar, post its acquisition, Choppies focused on improving efficiencies at Kamoso to ensure its revival. He added that Kamoso is now in a position to make money and expects its impact to be felt in the next reporting period.
Choppies employs 11,000 people and is the largest grocery retailer in Southern Africa, outside of South Africa.
Kamoso takeover has granted access to the group’s well-known divisions such as the colossal liquor retailer Liquorama, Builders Mart, Mediland, Lemepe, Mont Catering and Refrigeration and others.
Kamoso is focused on manufacturing, packaging, supplying and distribution.
Choppies said it can see a silver lining in the Kamoso business model- especially in the building material business ( Builders Mart ) as there is demand for building materials in the countries in which it operates in.
“There is rapid urbanisation resulting in a demand for housing and infrastructure increasing exponentially within Africa. Africa also has an expanding middle class. A significant majority of Africans in the middle class hold salaried jobs or own a small business,” added Ram Ottapathu, Choppies Group Chief Executive Officer (CEO).
Choppies will be expanding Builders Mart to the African countries that it operates in. It’s operations are sprawled across the southern African region; Botswana, Namibia, Kenya, Mozambique and Zambia.
Further, Choppies will also be expanding its store count in Botswana Namibia and Zambia.
CHOPPIES STRATEGY
The Choppies strategy is focused on attaining balanced growth.
It is based on six pillars designed to ensure sustainable growth in the long term and value creation for shareholders.
Under these pillars, Choppies prioritises cash flow management and debt optimisation. It further aims to achieve comparable store growth as well as new space growth. The behemoth retailer is also dedicated to expanding its Fintech journey as well as achieve margin expansion, according to Ottapathu.
Choppies also wants to grow returns on equity and increase distributions to shareholders.
Under the fintech offering, Choppies offers mobile money solutions geared at achieving financial inclusion and giving customers ease of transactions.
Choppies is also focused on diversified product offerings to achieve growth. The Group is currently growing its existing footprint by introducing new formats like the Choppies Fried Chicken (CFC) as well as convenient stores (On the Go by Choppies) in partnership with fuel stations.
According to Ottapathu, over 21 percent of residents in Choppies’ operating countries visit Choppies monthly, serving an aggregated population of over 40 million people in Southern Africa
As an established grocery retailer, Choppies is already making commendable income from its financial services offering.
This basically includes commissions on mobile money transfers, sale of airtime and electricity.
But Ottapathu is optimistic with regards to growth potential.
At Choppies, e-commerce is not a significant portion of sales yet but it is rapidly increasing. Choppies expects exponential growth in online sales due to increasing urbanisation and expansion into hardware and homeware.
