Sefalana posted its highest half-year revenue on record but saw profits decline, as tough economic conditions in Botswana, currency volatility and weaker consumer spending weighed on margins.
For the 26-week period ended 26 October 2025, the retail and wholesale group reported revenue of P5.8 billion, up 9% year-on-year. However, profit before tax fell 10% to P197 million, while earnings before interest, tax and amortisation (EBITA) declined 14% to P193 million.
Sefalana said the softer profitability reflects challenging trading conditions in Botswana following the global slowdown in diamond demand, which has constrained liquidity and raised borrowing costs for consumers. Spending patterns have shifted toward lower-margin necessities, diluting overall gross margins.
The situation was exacerbated by an 8% depreciation of the Botswana pula against the South African rand in July 2025, after an adjustment by the Bank of Botswana. As most consumer goods are imported from South Africa, the weaker currency added an unanticipated P16 million to the group’s creditor settlements during the period. Excluding this once-off impact, profit before tax would have been P213 million, broadly in line with the prior period, the group said.
Despite margin pressure, Sefalana highlighted resilience across its regional operations. Total comprehensive income rose 63% to P310 million, largely driven by a P170 million foreign currency translation gain, as the rand appreciated against the pula, benefiting the group’s Namibian and Lesotho businesses.
Namibia emerged as the group’s largest profit centre for the period, contributing 36% of revenue and 35% of profit before tax. Turnover in the market rose 16% to P2.1 billion, while profit before tax increased 10% to P69 million, despite persistent pressure on consumer affordability and margins.
In Botswana, which typically accounts for around two-thirds of group profits, contribution declined to 54% of total profit before tax, down from 71% in the prior period. The Botswana FMCG business now operates 139 outlets nationwide following the opening of six new stores during the half-year. A further five stores are expected to open over the next six months.
Gross profit margin for the group slipped to 6.1% from 6.8% previously, reflecting heightened competition and the decision to absorb some cost pressures to protect consumers from sharp price increases following the pula depreciation.
Inventory levels rose to a historic high of P1.7 billion as the group increased buffer stock to avoid in-store shortages. Plans to build a 10,000-square-metre distribution warehouse in Gaborone North, estimated to cost P90 million, have been deferred due to elevated borrowing costs.
Despite the challenging environment, Sefalana increased total employment by 5% to 8,555 employees and maintained its position as the largest retail and wholesale company on the Botswana Stock Exchange, with a market capitalisation of approximately P4 billion at the end of October.
Looking ahead, the group said it remains cautiously optimistic that economic conditions will improve as Botswana continues to diversify its economy and global diamond demand recovers. While no interim dividend was declared due to the need to preserve cash and fund growth initiatives, Sefalana indicated it hopes to declare a final dividend after the full-year results to April 2026.