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Cashbuild declares sharply increased dividend as headline earnings soar

During the year Cashbuild says it opened 10 stores, refurbished 29 stores and relocated five stores. Picture: Simphiwe Mbokazi

During the year Cashbuild says it opened 10 stores, refurbished 29 stores and relocated five stores. Picture: Simphiwe Mbokazi

Published Sep 2, 2021

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Cashbuild, the building materials and hardware group, lifted headline earnings a share by 152 percent to 2 872.6 cents in the year to June 27 due in part to solid revenue growth, which has since come off.

Group revenue for the first six weeks after year-end had declined 10 percent compared to the same six weeks of the prior year.

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Nevertheless, in recognition of the good results, and due to cash not used for the R1 billion acquisition of The Building Company that was thwarted by competition authorities, the dividend was raised substantially to 2 211c from 272c, Operations director Shane Thoresson said on Wednesday.

Results for the year to June 27 released on Wednesday showed revenue up 25 percent to R12.62bn. Operating profit doubled to R1.04bn from R520 million.

Revenue for stores in existence prior to July 2019 (pre-existing stores - 298 stores) increased 23 percent and the 21 new stores contributed 2 percent growth.

Thoresson said revenue growth trends had slowed and this year, including the looting, was currently much in line with last year’s elevated levels. He said although the market remained uncertain, it was unlikely that the strong building materials industry sales growth in 2020 would be repeated.

He said last year’s growth had been propelled by building material and hardware suppliers experiencing production delays from hard pandemic lockdowns, and subsequent demand that outstripped supply.

He said shortages of some building materials last year, for much the same reasons, such as for cement, steel and other products such as doors, had begun to stabilise.

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Gross profit increased by 34 percent. Selling price inflation was 7 percent at the end of June, when compared to June 2020.

The group said operating expenses, including new stores, were well controlled considering the revenue growth, increasing by 17 percent - existing stores contributed 15 percent and new stores 2 percent. This resulted in operating profit increasing 100 percent.

Cash and its equivalents increased to R2.55bn, mainly driven by increased profitability. Creditors’ balances were higher due to supplier deliveries normalising from the low base a year ago.

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Stock levels, including new stores, had increased 22 percent with stockholding at 74 days (June 2020: 60 days). Net asset value per share increased by 21 percent to 10 212c.

During the year Cashbuild opened 10 stores, refurbished 29 stores and relocated five stores. Two Cashbuild and seven P&L Hardware stores were closed when their lease agreements expired.

“Cashbuild will continue its store expansion, relocation and refurbishment strategy in a controlled manner considering pandemic uncertainties, applying the same rigorous processes as in the past.”

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Thoressen said some 10 new stores would likely be opened in the new financial year, and the repair and refurbishment of the 36 looted stores was a current priority.

The protests and looting of July in Gauteng and KwaZulu-Natal saw 36 stores damaged, looted and unable to trade. Cashbuild had insurance cover in place. The impact of looting and losses incurred was still being assessed.

The share price increased 4.62 percent to R267.62 by midday yesterday. Over a year, the share price was up 40 percent.

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