BY MBONO MDLULI
MBABANE – The wholesale and retail industry was able to make E2 billion in 2022.
According to the 2023 Company Survey Report, the ‘wholesale and retail’ sector comprises of car dealerships, fuel retailers, supermarkets, wholesale & retail of construction material, and pharmaceutical products.
The sector was represented by a total of 12 companies, of which six companies recorded positive performance, whilst the other six reported negative performance. Six companies reported revenue amounting to E2.433 billion in 2022, reflecting a growth of 31.8 percent, with the fuel sub-sector accounting for 57.7 percent of the revenue.
Three companies in the wholesale of fuel participated in the survey. On average, the sub-sector recorded an increase in volume sales due to higher demand, mainly from commercial activities. This was particularly from coal transportation coupled with support from SA depots which boosted supply.
However, one company in the sub-sector reported a decline in fuel volumes due to supply constraints. The developments in fuel volumes supported revenue growth for two companies that recorded growth in volumes, whilst the other company that had a decrease in volumes also recorded a decline in revenues.
All the companies surveyed within the fuel retail segment reported that their profit margins were under pressure due to high cost of sales, that could not be fully transferred to the consumer due to the regulated selling prices. The medium-term outlook for the fuel retail subsector is broadly positive, on account of planned expansions and anticipated relaxation of the policy on the importation of fuel.
A total of four companies in the car dealership retail sub-sector participated in the survey. Three companies reported a positive performance in terms of volumes and revenues, whilst one establishment reported a negative performance. On average, revenues were on the upside mainly driven by an increase in demand for passenger and heavy-duty commercial vehicles.
However, one company reported that revenues significantly fell in the period under review, owing to dwindling local demand for their car brands. In line with the revenue movements, two establishments reported an increase in profits during the period under review, whilst one company reported a loss.
In the medium term, the subsector remained optimistic that positive performance would be sustained, largely benefiting from increasing local demand and product diversification to include motorcycles and electric cars. Three supermarkets participated in the survey, of which two recorded poor performance on account of higher operational costs mainly electricity, petrol and rising cost of sales, which were linked to the effects of the Russia-Ukraine conflict.
In addition, there was a temporary closure of some branches for refurbishment in the aftermath of the vandalization of property, that was linked to the socio-political unrest experienced in 2021. One establishment reported an improved performance in the period under review, owing to high volumes of sales particularly from the rural customers as people migrated to the rural areas during the COVID-19 lockdowns.
The medium term remains broadly positive as companies anticipate expansions and increasing coverage to rural and peri-urban areas coupled with product diversification. Other sub-sectors within the ‘wholesale & retail’ was represented by two companies in the period under review. Volume sales fell in 2022 due to supply chain disruptions emanating from production challenges relating to the energy crisis in, rising costs and logistics.
Similarly, revenues fell in the year under review, depicting a slowdown in volumes sold on account of base effects from the COVID-19 pandemic. The outlook for the sub-sector is on the downside, owing to the persistent energy crisis in SA and increasing costs of imports due to a depreciation of the local currency.
