Johannesburg - Grocery chain store, Spar Group, pointed to diversification of its operations into international markets on Wednesday as it reported positive growth for the six months to 31 March despite Spar Switzerland incurring an operating loss of R8.3 million.
The reported turnover of Spar was up 12.6 percent to R47.4 billion higher than last year turnover of R42.1 billion, with 31.4 percent of total turnover generated in foreign currency. Profit after tax improved 10 percent to R908 million, up from R825.4 million last year, due to lower effective tax rates in Ireland and Switzerland.
But Spar's Southern African business, with reported turnover growth of 4.9 percent to R32.5 billion from R31 billion last year, was impacted by tough trading conditions which are being aggravated by the uncertain economic and political landscape. Spar chief executive, Graham O'Connor, said the tough trading environment in South Africa was likely to persist for the balance of this year, particularly with the political uncertainty undermining consumer and business confidence.
The retail turnover of TOPS at Spar increased 9.1 percent to R5.2 billion from R4.7 billion in 2016, as growth was impacted by competitors' aggressive entry into the liquor market. The group incurred R213.3 million in capital expenditure for operational investments in Southern Africa to expand the perishables facilities at the North Rand and Western Cape distribution centres, IT infrastructure upgrades and software development.
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Spar said the capital expenditure budget in Southern Africa for the next six months is approximately R500 million and includes land purchases for future expansion at the KwaZulu-Natal distribution centre and for the construction of a future distribution centre west of Johannesburg.
Headline earnings per share (HEPS) declined marginally by 0.9 percent to 475.5 cents, from 480.0 cents last year, fundamentally due to the higher weighted average number of shares issued in April to part fund the foreign acquisitions, as well as settling the BBBEE share schemes in August 2016. The board approved an interim dividend of 240 cents out of income reserves.
AFRICAN NEWS AGENCY