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Companies expect lower profits

The challenging operating environment experienced by companies in 2016 is set to take shape in the form of figures as companies prepare for the financial reporting period.  


While there has not been comprehensive information on the extent of the damage caused by economic downturns in 2016, leading companies listed on the Botswana Stock Exchange have offered insights (BSE) in what was perhaps the worst year for local businesses, particularly big companies in the financial services industry.


The 2016 operating environment, although considerably better than 2015, was marked by several retrenchments from different sectors of the economy, with the liquidation of BCL group likely to have the most impact. The retrenchments were in addition to the rising unemployment rate, stagnated wages, and accommodative monetary policy.


As the reporting period approaches, listed companies have sent out less optimistic cautionary notes warning shareholders to exercise caution when dealing with the affected company’s stock. While some cautionary statements were scant in details, other companies were outright blunt that they were expecting lower than projected profits.


Letshego, the largest indigenous BSE-quoted company with a market capitalisation of just under P4.7 billion, has announced that that the Company’s profit after tax for year ended 31 December 2016 will be lower than those reported for the period ended on 31 December 2015. In the previous full year end results for 2015, the Pan-African financial services group achieved profit before tax of P1.1 billion, a 5% increase on the prior period.


The drop in profit is likely the result of foreign currency fluctuations, retrenchments in the local economy, reduced borrowings, and historically lower interest rates that have driven customers to seek cheap credit from banks. Over the last five years, Letshego has experienced a period of rapid transformation from its roots in Botswana as a consumer finance company established in 1998, with a single product, into a pan-African broader based financial institution.

 

It has achieved geographic and product diversification with subsidiaries across ten countries in Southern, East and West Africa – Botswana, Kenya, Lesotho, Mozambique, Namibia, Nigeria, Rwanda, Swaziland, Tanzania and Uganda. In its 2015 annual report, the group said whilst the business environment has remained competitive, it has continued to grow its market share via geographic expansion and acquisitions into new markets and diversification with a broader product and services offering.


Letshego is currently trading at P2.20 after losing 4.34% of its stock value in year to date returns. This will not look good for shareholders who had to stomach a loss of 20% in 2016. The stock however remains the most traded on the BSE. The Botswana Insurance Holdings Limited (BIHL) has also announced that the Group’s results for the year ending 31 December 2016 will likely be lower than those reported for the year ended 31 December 2015. In 2015, the group achieved profit after tax of P597.7 million, 18% higher than in 2014. The group says the expected lower profit for 2016 is mainly due to current relatively unstable trading conditions.


BIHL Group has the most extensive exposure to the economy through its dominant subsidiaries which include Botswana Life Insurance Limited, Botswana Insurance Fund Management Limited, BIHL Insurance Company Limited as well as non-controlling stakes in Letshego Holdings (23%), Funeral Service Group (35%) and 21.5% stake in Nico holdings.


The group’s profits will be dragged down by fall in insurance premiums, high claims payouts, and reduced returns from the local and global equities markets. It will also be a double whammy for BIHL which will receive a lower share of profits from Letshego.  A fall in profit for the group will mask what has been an impressive performance at the stock market after the group’s share price gained 15.46% in 2016 at a time when most stock prices were falling. For this year, the stock is up by 0.22% to trade at P17.59.


The country’s largest bank, First National Bank Botswana (FNBB), is also expected to post lower profit. Although the bank has yet to confirm it, it has hinted that its exposure to the BCL group has left them in a vulnerable position. The bank says the full details of which will be shared at the announcement of the Half Year Interim Results later this month.


In its previous financial performance for the year ending June 2016, FNBB’s profit for the year fell by 15%, marking two years of declining profits on the back of a challenging trading environment characterised by low interests, limited lending and investment opportunities. The bank saw its profit before tax fall by 13% to P659 million while the profit after tax was at a 2 year low of P504 million. With its exposure to BCL coupled with reduced consumer spending power, the interim results are expected to reflect the upheaval that happened in the last half of 2016.


FNBB’s half interim results will be closely watched by investors who have started to lose faith on the company stock. The bank, which has the biggest market capitalization under the local counter on the BSE, has lost as much as 22.51% of its share value in 2016 and the rout has extended to this year as the stock continues to lose, shedding off 7.43% to trade at P2.75.


The embattled Standard Chartered Bank Botswana which was the first to confirm its large exposure to BCL group has also warned that its financial performance might not be stellar. The bank has consecutively reported declining profits since 2014. In its last reporting period, the oldest bank in the country reported lower profit for the half year ended June 2016. For that period, the bank slightly improved on its revenues and contained costs following a dismal 2015 financial performance. However,  a 42% surge on net impairments losses resulted in the bank posting profit before tax of P80.1 million, while the profit after tax fell by 5% to P63 million.


Standard Chartered Bank Botswana shocked many in its financial performance for the year ending 2015 after recording profit after tax of P47.4 million, a steep drop from a high profit of P319.2 million recorded in 2014. The steep drop was attributed to high net impairment losses as a result of exposure to the mining sector. While the bank seemed to have been recovering from that, the liquidation of BCL will surely have a negative material impact on the upcoming full financial results to be released next month.


The bank’s share price has been under pressure since 2015 after losing 11% of its share value, followed by another decline of 30.80% in 2016. The bank’s stock is currently trading at P7.60 having lost about 1.9% since the beginning of the year.

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Food prices continue to rise, but at a slower rate

28th November 2022

Prices for cereals or staple foods in Botswana and other Southern African countries continue to rise at a slower pace, following trends in the global markets, according to the latest November 2022 Food Price Monitoring and Analysis by Food Agricultural Organization (FAO) of the United Nations.

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Still doing business the old way?

18th November 2022

It’s time to get business done better with MTN Business Botswana’s ICT Solutions.

Running a digital businessMTN Business Solutions Botswana, popularly known as MTN Business is an Internet Service Provider. We are a subsidiary of MTN Group Limited, a multinational telecommunications Group headquartered in South Africa, which operates in 19 markets across Africa and the Middle East.

More and more, clients are looking for ways to keep their staff productive in a dynamically changing business environment. Whether your people are working from home, the office or abroad, there is a growing recognition that digitising your operations can offer unprecedented commercial value in flexibility, productivity and growth. This new, digital reality means that it is more important than ever to stay agile – if there is anything that can slow a business down, it is being burdened by othatld technology.

Having made substantial investments in fibre technology, high-speed terrestrial and undersea networks and new frequency spectrum across the markets wherein it operates, MTN is perfectly positioned to respond to this shift in the market.

A few years ago, MTN also made the decision to build an IP capable radio network for its mobile services, giving its core network the ability to seamlessly integrate with enterprise IP networks. The mobile towers deliver services to enterprise clients absolutely anywhere it has a network, shortening the last mile and removing complexity and cost.

Now there is increasing demand from clients to connect their remote sites in all areas, including rural and semi- rural. MTN has assisted clients with overcoming this connectivity hurdle, enabling their staff to get the job done wherever they are.
MTN’s evolution

For MTN, the focus has shifted from just being a core telecommunications services provider, towards also becoming a technology solutions provider. The service offering now also includes Unified Communications, Data Hosting and Cloud Solutions, Security-As-A-Service and Managed Network Services. The scope has changed to being client and industry specific, so the requirements and service portfolio vary from one client to the next. The expectation is that a company like MTN must respond to these challenges, helping clients to get business done better as they shift from old to new technologies.

As many businesses continue to grapple with a digitally dynamic world, they face new challenges that have to be solved. This environment will benefit those that are more digitally enabled and agile. It is a brave new world that will favour online over on-site, wireless over wired and fluid over formulaic. Businesses will seek out partners and suppliers that are every bit as flexible and forward-looking as they are.
Ultimately, clients need partners like MTN Business that will invest in infrastructure, deliver the services they require, have market credibility, are financially sound and have a long-term commitment to their market presence.

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BIE to vitalize the Dignity of Engineers

9th November 2022

Botswana Institution Of Engineers (BIE), has last week hosted a gala dinner in  which they appreciated engineers who worked tirelessly and with dedication for 10 years from 1983 to steer the BIE to its current status.

The event that was held at the Phakalane Golf Estate had brought together young, experienced and veteran engineers and was held under the theme “Vitalize the dignity and eminence of all professional engineers”.

Explaining the theme, the institution’s treasurer, Thanabalasingam Raveendran said that engineers were looked upon reverentially with respect as the educated but with time it seems to have deteriorated. He indicated that there is a need to change the narrative by all means.

“The BIE exists for the welfare and the betterment of us Botswana engineers, we need to recognize specialised units within our Institution. We Engineers strongly believe in Engineers make it happen” Raveendran said.

He indicated that under the theme they appeal to all engineers to energize, to attain quality of being worthy of honour and respect and to achieve recognized superiority amongst the Society.

Raveendran stated that engineers need to ensure their end product is of good quality satisfying the end users expectations and engineers must be honest in their work.

“Approximately 8000 engineers registered with Engineering Regulatory Board (ERB) are not members of the BIE, engineers need to make every effort to recruit them to BIE” he said.

He alluded that BIE being a society, it currently needs to upgrade itself at par with professional institutions elsewhere like the UK and USA.

He further stated that BIE has to have engineering units of specialised disciplines like Civil/Mechanical/electrical etc

“As President Masisi indicated in his inaugural speech, the young people, who make 60 percent of the population of this country, are the future leaders and therefore investing in them is building the bridge to the future” said Raveendran

Kandima indicated that BIE has a memorandum of Understanding with Engineers Registration Board (ERB), where BIE is a recognised provider of CPD training, mentorship programmes and more importantly IPD undertaking to upgrade the skills and know-how of our engineers.

“For us to achieve our mandate and make worthwhile changes to engineering in Botswana, we have to be totally focused and act with intent” said Kandima.

Furthermore, Stephen Williams, past president of the BIE from 1986-1988 told the engineers that  the BIE provides a fertile environment where they can meet, share ideas and grow professionally.

“The BIE is also a nesting place for graduate engineers to learn from their peers and seniors, it also cater for engineering technicians and technologists and so nobody in the technology field is left out” he said.

He further indicated that Botswana Government provides a conductive environment for growth of engineering professionals.

“It must be stated that the Botswana Government recognises the existence of BIE and it can further be stated that the government enables ERB to carry out its mandate as a regulator of engineering professionals” said Williams

He plead with engineering companies to recognize and support BIE as it is the only source of engineering personnel’s for various Industries .

Furthermore, when giving his farewell speech, Michael Pinard , a past president of the institution  said how they are viewed as engineers by the general public might be due to some lack of appreciation as to exactly what role they play in the development of the country.

“The BIE slogan is aptly coined-Engineers make it happen, in other words, what man dreams engineers create” Said Pinard.

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