CA Sales gets earnings boost from expansion and acquisitions

Retail distributor and marketing firm CA Sales (CA&S) CEO Duncan Lewis says the company expects growth in disposable incomes in Namibia as that country develops its offshore oil resources capabilities. 

CA&S, which was spun out of investment holding firm PSG, offers a full spectrum of services, including distribution, warehousing, branding, marketing and in-store promotions for fast-moving consumer goods companies. Its clients include AB InBev, Coca-Cola, PepsiCo, Heineken, Tiger Brands, Unilever and Nando’s. Its biggest market remains Botswana, where it had 11.2% revenue growth to R5.7bn.

In 2023, CA&S bought Namibian distribution and execution T&C Group and increased revenue in that country by 50% to R2.1bn. This is out of its total revenue of R11.3bn for the 2023 year to end-December.

CA&S also operates in Eswatini, Zimbabwe, Zambia, Kenya, Lesotho and SA and plans to grow in East Africa. It describes itself as a “Southern and East Africa optimist” with a deep local knowledge of these markets and is a way for investors to have exposure to African countries.

In the 2023 year, headline earnings per share (HEPS), a measure that excludes one-off items, increased 25.3% to 97.97c. In the past year revenue grew 19.1% and 95% of the growth was organic and the rest from acquisitions. 

Asked if it expected to benefit as Namibia developed its deep-sea mineral and energy resources, Lewis said: “We expect the unemployment rate to decrease with [the awarding of] mining licences. More and more people will have disposable income and buy more of our brands.”

The firm also expected an influx of skilled people into that country, he said.

It was benefiting from growing economies outside SA. 

“If you look at the geographies we are in, Africa has had steady economic growth that is higher than in SA.

“SA is losing traction compared to the rest of the market and that’s the tragedy. In SA, we’re finding it more and more difficult to get double-digit revenue growth,” he said.

The group said it planned to acquire more businesses as it had the balance sheet to do so and hoped to take advantage of economic growth in Southern and East African countries. 

A final dividend of 19.56c was declared, up from 15.35c a year ago.

CA&S listed separately in mid-2022 at R5 a share, with the share almost doubling in value. It closed at R11.50 on Wednesday.

It earned R11.3bn in 2023, with revenue up 19.4%. The profit margin also improved to 5.3% from 3.5% margin. It plans to earn R20bn in annual revenue by 2026.

Update: March 27 2024
This article has been updated with new information.

mackenziej@arena.africa
childk@businesslive.co.za