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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 reported a 9% drop in full-year net profit to R425.25m, which it blamed on sluggish economic growth putting pressure on consumer spending.

Sluggish economy hits Cashbuild as consumers tighten belts

RETAILER NEWS

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.


Business Live 

Read more about: retailer | retail | jse | consumer spend | cashbuild

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