Choppies' profit outlook impacted by foreign exchange and operational costs

Choppies Enterprises' taxed profit will likely decline by between 35% and 25% for the 12 months to June 30, impacted mainly by the loss on the sale of the Zimbabwean business, foreign exchange rate differences, cost of diesel to mitigate load-shedding and profit on the sale of Mediland.

The Botswana-based southern Africa supermarket group said in a trading statement Wednesday it expects taxed profit to be between Botswana Pula (BWP) 88 million and BWP 102m, compared with BWP 136m last year.

Choppies’ share price fell 0.54% to 184 cents on the JSE Wednesday morning, but the share price had risen strongly and steadily from 74 cents at the same time last year.

As a result of the sale of the Zimbabwe segment, taxed profit for total and discontinued operations was impacted by the reclassification of foreign currency translation reserves and the reclassification of the hyperinflationary reserves through profit or loss.

Taxed profit was also impacted by the 31% tax rate, which is higher than the standard rate, primarily due to losses in Namibia for which deferred taxes had not yet been raised, and non-deductible loss on the sale of the Zimbabwe business.

Last year's tax rate was also lower than the standard rate due to deferred tax raised on carried forward tax losses in the Zambia segment.

“The group expects continued resilience in core markets despite external challenges, including regional currency volatility, inflationary pressures and global uncertainty,” Choppies' directors said.

Priorities remained to consolidate profitability in Botswana, Namibia, and Zambia, complete the turnaround of hardware and Liquorama, maintain financial discipline and covenant headroom, and advance ESG initiatives, they said.

“The board remains confident that Choppies is positioned for sustainable growth and improved shareholder returns,” the directors said.

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