Double-digit profit growth for Pick n Pay as turnaround plan pays off
By Karl Gernetzky - Oct 22nd, 09:12
Pick n Pay has continued to reap the benefits of its turnaround strategy, positing double-digit profit growth in the six months to end-September after an intensive focus on supply costs.
SA's second-largest grocer by market capitalisation, headed by former Tesco UK boss Richard Brasher, said on Tuesday it had managed to restrict internal selling price inflation to 2.2% during the period. The company has expanded its fresh foods offering in recent years, even as it consolidated its supply base, saying this was paying off particularly in SA.
Group trading profit increased 12.5% to R1.2bn, with an improvement in the trading profit margin from 2.6% to 2.7% of turnover.
“This is a credible performance given the difficult trading conditions across Southern Africa,” the company said.
Trading profit from its SA segment increased 16.4% year on year, with the company upping its interim dividend 9.5% to 42.80c per share.
Pick n Pay has about 1,858 stores, including Boxer stores and TM Supermarkets in Zimbabwe. Hyperinflation in Zimbabwe and tough consumer conditions in Zambia weighed on the group's results, with its rest-of-Africa division's contribution to group profit before tax falling 79.8% to R27.5m.
Group income from value-added services, such as ticket sales and banking transactions, also boosted its performance, with income rising 16.1% year on year. During the period Pick n Pay launched a portfolio of insurance products in partnership with insurer Hollard, having rolled this out at 25 stores.
Pick n Pay said it had seen encouraging results to date and would expand this offering to more stores over the next 18 months.
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