Cashbuild lifts final dividend in challenging trading conditions
CAPE TOWN - Cashbuild lifted its final dividend by 21 percent to 420 cents per share in the 52 weeks to June 30, but management warned that trading conditions were expected to remain “extremely challenging” in the year ahead.
South Africa’s largest retailer of building materials and associated products reported a 6 percent decline in headline earnings per share to 1 750 cents.
Operations director Shane Thoresson described the results as reasonable in a tough trading environment, and a “lot of work” needed to go into the next 12 months to improve the results further.
He said in a telephone interview that consumers were cash strapped, but people were still spending money on upgrading homes and on decorative work, as opposed to low demand for building materials for new buildings, developments and infrastructure.
Revenue was up 4 percent to R10.62 billion, while operating profit was down 7 percent to R507.3 million. Revenue for the six weeks after year-end had increased by 1 percent on the comparable six week period.
The total dividend was marginally higher at 855 cents from 842 cents.
Eleven new stores were opened, and 14 were closed. Six of the closures were DIY pilot stores where a decision to close them had been taken some time ago, while the rest were “long term loss makers” where their leases had come to an end. The group has 315 in total, he said.
Of the 11 new stores opened, nine were Cashbuild stores and two P&L Hardware stores, while 26 stores were refurbished, and four Cashbuild Stores were relocated.
Thoresson said the store expansion, relocation and refurbishment strategy would continue, and the group planned to open 10 new stores in the new financial year.
He said the group believes there remains significant opportunities to open new stores over the longer term, in South Africa and in other African countries.
The operating margin decreased slightly to 25.1 percent from 25.2 percent. Selling price inflation averaged 3 percent.
Operating expenses, including new stores, increased 7 percent, 4 percent for new stores and 3 percent for existing stores. Thoresson said they were pleased at being able to keep a lid on operating expenses for another year.
Cash and cash equivalents decreased by 38 percent to R590m due to payments to suppliers effected prior to year-end close resulting from the 53rd trading week.
Stock levels, including new stores, have increased by 2 percent with overall stockholding at 84 days (2018: 88 days) at year end.
Net asset value per share increased by 14 percent to 8 636 cents.