(Business in Cameroon) - Société des Eaux minérales du Cameroun (SEMC), SABC group’s arm in the water segment, expects to end FY2022 on a bad note with declining profits.
The water arm of SABC, a local subsidiary of Castel group, is struggling to maintain profitability after three successive years of losses (-CFA316 million in 2016, -CFA936 million in 2017, and -CFA799 million in 2018). For FY2022, Société des eaux minérales du Cameroun (SEMC) expects a net profit of CFA504 million, down 42% from CFA729 million in 2021.
According to the company's financial statements, which still need validation, the underperformance was due to a sharp increase in spending for raw materials and supplies (+143%) as well as transportation. Spending on the company's operational activities increased by 33% to CFA1.7 billion, despite an 8% reduction in personnel costs. Meanwhile, revenues increased by 6% to CFA10.5 billion, driven in particular by an improvement in sales.
Another year without dividends
With this situation, the SEMC Board will suggest that shareholders allocate the entire profit of the current year to the retained earnings account, whose debit balance would then be reduced from CFA651.9 million to CFA151 million. This means another year without the distribution of dividends, same as the past 7 years. Dividend distribution could only resume if the company makes a significant profit in 2023, which allows it to erase all of its losses.
Let’s note that the Castel group has in 2022 decided to exit the mineral water sector in several markets on the continent. The decision has already materialized in Morocco and Côte d'Ivoire but the group reassured that it has not yet decided on SEMC. "The company (SEMC) continues its expansion to conquer more market shares, and get back into profitability,” said Stéphane Descazeaud, MD of SABC.