Advertise with fastmoving.co.za
 
 

Cashbuild builds strong results in tough climate
Cashbuild builds strong results in tough climate

Cashbuild builds strong results in tough climate

RETAILER NEWS

bdlive.co.za - Mar 3rd 2016, 09:09

Cashbuild, a major retailer of building materials in Southern Africa, reported a "strong set of results" for the six months ended-December, excluding a once-off empowerment cost of R63m. 

"It’s a pleasing set of results," CEO Werner de Jager said on Tuesday (1 March). He said it had grown its pipeline of products, keeping costs in check, and the gross margin intact.

"If (all this) comes in at the right level, it (positively) filters down to the bottom line."

Excluding the once-off costs, operating profit shot up 32% to R331m, resulting in a record operating profit margin of 7.3%, compared to the 6.3% achieved in the period to December 2014.

Revenue rose 14% to R4.5bn. Fifteen new stores that were opened after July 2014 contributed 3% to revenue growth, with the pre-existing 213 stores contributing 11% of revenue growth.

This increase was achieved in "tough trading conditions", the group said, as gross profit percentage was maintained at 23.7%.

The group, which sells directly to cash-paying customers through 228 retail outlets, gained shareholder approval in November to buy back 200 000 shares and distribute these — with a value of between R2 500 and R17 500 — to each Cashbuild Empowerment Trust beneficiary.

Mr De Jager said that the company’s empowerment actions had been a "great success story", providing R209m in a "constant flow" of dividends to staff since 2005.

While the R63m empowerment payout reined back profit, he said the true value of operations lay in the group’s trading operations, which turned over 15-million customers a year, many in townships and rural areas.

The effective tax rate for the period was 35%.

This was 6% higher than in the previous similar period, mainly due to an increase in non-deductible expenditure relating to the empowerment transaction.

He said home renovations were a big contributor to growth. However, a weaker rand would push up prices, especially for imported products, such as power tools, and those with imported content.

On the domestic front, product inflation had been low at 2%. Stiff competition in SA’s cement markets enabled the group to keep prices in check for a product that made up 25% of sales revenues.

Business in Swaziland, Lesotho, and Namibia was affected by generally poor economic conditions including drought, but Cashbuild saw growth in all nine SA provinces.

"Given the current economic environment and consumer malaise, I am astonished at the strength and resilience — again — of the Cashbuild results," Anthony Clark, small and medium market cap analyst at Vunani Securities, said yesterday.

"Their new drive to expand their footprint and compete in a marketplace which is under strain is testament to the quality of management and the business model," he said.From DFM Publishers (Pty) Ltd 

Related News

Regulation of online and mobile gambling in Africa must gather pace
29/10/2019 - 10:20
The gambling industry in Africa has been busy recently following the ICE Africa and Big African Summit events. These explored the current state of legal gambling within the continent and included conferences by established industry professionals.

Pick n Pay unveils its revamped "On Nicol" flagship store
18/10/2019 - 10:59
Pick n Pay’s flagship store On Nicol officially welcomed customers after a comprehensive revamp. The refurbished store has an exciting array of new offerings with the very best in retail concepts developed in South Africa and from around the world. Customers can expect an enhanced fresh food experience, a huge focus on product quality, a much-improved range, innovative third-party services, and refreshed customer service.

Cashbuild flags tough environment amid rationalisation strategy
03/09/2019 - 12:51
Building materials retailer Cashbuild weathered a tough trading environment to deliver 3% growth in operating profit for the year to end-June, boosted by an extra trading week and the addition of 11 new stores.

DIY retailers struggle in sputtering economy
07/03/2019 - 13:48
SA’s DIY retail stores have mostly been immune to economic downturns.

The signs are here that South Africa has reached its economic crossroad
03/12/2018 - 11:37
While South Africa attempts to shore up its own economy amid high inflation rates and a stuttering inherited financial system, the continent as a whole continues to grow. The big question, though, is whether South Africa will get left behind in terms of international investment if it doesn’t improve its financial situation, and how to avoid this.