Sluggish economy hits Cashbuild as consumers tighten belts
By Andries Mahlangu - Aug 28th 2018, 14:15
Building materials retailer Cashbuild reported a 9% drop in full-year net profit to R425.25m, which it blamed on sluggish economic growth putting pressure on consumer spending.
Cashbuild typically serves home builders and improvers in the lower living standards measure (LSM) segment‚ as well as contractors and public sector infrastructure developers.
Revenue was up just 5% to R10.2bn in the year to June, with selling price inflation holding steady at 2% from a year ago.
But operating expenses rose 9% as Casbuild expanded its store base. It added 25 new stores to bring its total to 318.
"This was once again a difficult year, with results deteriorating even more in the second half," CEO Werner de Jager said in the results statement.
He said revenue for the stores that were in existence before July 2016 remained at similar levels to 2017, with the 42 new stores opened since then largely responsible for the 5% increase in revenue for review period.
The company, which also operates in Namibia, Swaziland and Lesotho, expects tough conditions to persist in the near to medium term.
"This is a classic business that is the coalface of a weak South African economy. It’s still trading on a price-to-earnings ratio of 16, which is not cheap," said Nick Kunze, analyst at Bridge Stockbrokers.
The value of the shares has dropped 30% on the JSE this year, to R313, underperforming the all share index, which is flat over the same period.
Cashbuild declared a final dividend of R3.46 per share, bringing the total to R8.42, which was down 9% on the year-ago period.
Headline earnings per dropped 9% to R18.67.
Retail sales beat expectations in February
19/04/2019 - 12:39
SA shoppers spent more than expected in February, with retail sales growing 1.1% year on year, led by expenditure in the textiles, footwear and clothing sector.
Pick n Pay surprises local schools with Easter treats
19/04/2019 - 11:57
Two schools were recently surprised with chocolate eggs and hot cross buns ahead of the Easter Weekend.
Asian revenue surpasses European for first time at L’Oreal
18/04/2019 - 09:07
L’Oreal got more revenue from Asia than from Western Europe for the first time last quarter as the region’s surging demand for luxury products continued to resist the drag of a slower Chinese economy.
Easter is also a feast for criminals, retailers and consumers warned
18/04/2019 - 09:01
There is a tendency among criminals to use the Easter long weekend - and its spike in shopping - to their advantage, says Richard Phillips, joint CEO of retail cash management company Cash Connect.
Checkers hot cross buns go viral
17/04/2019 - 13:42
Checkers hot cross buns are trending on social media and South Africans are in stitches following the release of a viral video in which a false-positive breathalyser reading was recorded for a police officer.