Verimark predicts surge in profit

A Verimark outlet at the Clearwater mall in Johannesburg. File picture: Simphiwe Mbokazi

A Verimark outlet at the Clearwater mall in Johannesburg. File picture: Simphiwe Mbokazi

Published Sep 26, 2016

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Johannesburg - Listed direct retailer Verimark has said that it expects its profit before taxation in its interim results to increase by as much as 185 percent.

Verimark shares surged 11.11 percent after the group said it expected the improvement in profits for the six months to the end of August despite weaker consumer demand that had been dented by the slowing economy. The shares closed at R4 on the JSE on Friday.

“As a result of the ongoing depreciation of the rand against the US dollar, it became necessary for Verimark to increase selling prices in mid-February 2016 to maintain its profit margins,” the company said in a statement.

It said price increases were greater than the previous year’s increase in February, which affected sales but resulted in improved gross profit margins.

Verimark said it expected profit before taxation to be between R3.4 million and R4.1m, an increase of between 170 percent and 180 percent, compared with the loss before taxation of R4.8m for the previous period.

Headline profit per share was expected to grow between 1.9 cents and 2.4c - an increase of between 153 percent and 167 percent, compared with a 3.6c per share headline loss, and profit per share was expected to be between 151 percent and 165 percent compared with a 3.7c loss per share for the corresponding period.

Michael van Straaten, the chief executive of Verimark, said 98 percent of the company’s imported products had boosted profit. Imported products include the Hydovac machine and Floorwiz. Van Straaten said that even the sales for its Africa Diamond Guard Car Polish range had been “unbelievable”.

He said the company was affected by the exchange rate, which had impacted negatively on its profit over the past five years, but had reactivated its branches abroad. The company expects to release its interims on or about October 13.

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