For the six months ended December 31, 2023, Choppies Enterprises Limited reported that its financial results were bolstered by the positive impact of the Kamoso acquisition, while the economic challenges confronting the Choppies Zimbabwe segment exerted a negative influence on overall results.
Despite the underperformance of the Zimbabwe segment, and when excluding the effects of the Kamoso acquisition, the Group demonstrated robust performance, with retail sales surging by 21.3 percent to P4.258 billion, compared to P3.511 billion in 2022.
According to the group, this growth was fueled by the opening of 10 new Choppies stores and the acquisition of 100 liquor and hardware stores from Kamoso, in addition to other divisions within Kamoso.
Group earnings before interest and tax (EBIT) surged by 28.4 percent, while profit after tax from continuing operations rose by 40.8 percent. Additionally, earnings before interest, taxes, depreciation, and amortisation (EBITDA) saw a notable increase of 20.6 percent. Profit after tax for the group, excluding the Zimbabwe segment, experienced a remarkable surge of 117.4 percent.
The Botswana segment continues to show resilience with sales increasing by 9.4 percent and like-for-like sales growth at 6.7 percent. Sales increased to P2.505 billion (2022: P2 290 billion), supported by volume growth and price inflation.
“The excellent performance resulted from good in-store execution and improved customer engagement, as well as due to the inventory optimization system. Despite the continued competition from retailers and wholesalers, the segment managed to improve gross profit margins by 60 basis points,” Choppies said.
For the period under review, the Kamoso segment sales increased by 7.1 percent and Kamoso moved from a loss after tax of P4 million last year to a profit after tax of P11.8 million this year. These numbers exclude the loss of P10 million relating to the discontinued business of Kerioti.
“We are seeing vital signs of a turnaround and confident that the acquisition will be value accretive for the Group going forward,” Choppies stated.
Meanwhile, the weakening of the Zimbabwean Dollar and economic challenges decreased Pula sales in the Zimbabwe segment by 35.4 percent, EBIT and EBITDA by 77.8 and 53.1 percent respectively, as cost inflation reduced margins. Adjusted EBIT and adjusted EBITDA decreased by 258.3 and 158.8 percent respectively.
Despite the significant declines in profitability, Choppies says the segment is still profitable, including the legacy debt receipts.
“We have implemented several measures to reduce losses and enhance cash flows. During the reporting period, two stores were closed and one store was relocated. We also indefinitely deferred a portion of the remuneration of the senior management team. We are also planning to close or relocate at least four stores to limit losses post the reporting period,” the company disclosed.
