Engen profits grow despite weak commodity prices
Isaac Pinielo | Wednesday April 5, 2017 16:05
The group recorded P269.6 million in the year 2016, an increase from P263.5 million from the previous year.
Commenting on the results, Engen Botswana managing director, Chimweta Monga said the increase in profit was due to the implementation of a much more efficient supply chain with a lower cost to serve and good margin management.
“The group exceeded many of the operating parameters achieved in 2015 during the year under review. This is testimony to the resilience of the group’s business model,” he said.
Monga also noted that the group’s total sales volumes grew by two percent between 2015 and 2016. He added that while commercial sales declined by 12% as a result of the poor performance of some of the high energy consuming sectors of the economy this was more than offset by high volume retail sales, which grew by 11%. This, he said, was attributed to strong volume generating marketing activity.
According to Monga, foreign exchange gains increased marginally from P4.3 million at the end of 2015 to P4.4 million at the end of 2016.
“Overall the group’s performance reflects a 21% increase in net profit after tax,” he said.
He further stated that the group’s commercial side of its business continued to deliver robust results in spite of the completion of a number of construction projects in prior years and challenges faced by the mining, construction and agriculture sectors of the economy.
Monga said crude oil prices remained in the $50 to $55 range for most of the year, which reduced the risk of inventory revaluation impairments.
He said fuel supplies into Botswana continued to be stable with industrial action in both South Africa and Botswana having little effect on supplies. In addition, Monga said a planned shutdown at the group’s affiliate refinery in Durban was well managed and supply remained consistent.
“The group streamed three ‘new to industry’ retail outlets, one in February 2016 and two in December 2016,” he said.
While competition in the retail space across the industry increased with several new outlets being commissioned, Monga said they managed to grow retail sales by 11% in the year under review.
“Engen Botswana continued to offer outstanding customer service at our retail outlets as evidenced by our consistent top three rating in the Engen Group of Companies in the international business division for the year 2016,” Monga said.
He added that the retail channel continues to be the cornerstone of the business in Botswana, noting that they allocate a substantial amount of their capital expenditure resources to grow the retail network and convenience offering and introduce innovative products that will set them apart from the competitors.