DURBAN - PEPKOR Holdings has managed to reduce its debt more than 60 percent after it flagged that its profits would grow by more than double digits in the six months to the end of March on strong trading performance despite volatile operating conditions as a result of Covid-19.
Pepkor said it had reduced its net debt to R6.1 billion from R14.1bn to last year, due to its strong cash generation. It said it expected its headline earnings per share (Heps) from continuing operations to increase at least 9.1 cents or 20 percent from 45.6c last year and earnings per share (Eps) to shoot up 8.8c or 20 percent from 43.8c reported a year earlier.
“The increase in Eps and Heps is attributed to strong trading performance in addition to the marked reduction in net debt and related finance costs during the period,” Pepkor said.
The group reported an 8.1 percent increase in revenue from continuing operations to R36.5bn and said conservative credit granting across all credit books, in addition to lower interest rates, negatively impacted growth in revenue earned from the Tenacity, Connect and Capfin credit books.
Last year’s revenue was largely unaffected by Covid-19. Pepkor said it achieved strong trading and continued market share gains in nearly all retail brands according to the Retailers’ Liaison Committee data, supported performance despite volatile operating conditions.
“The period under review included restrictions imposed to deal with the
second wave of Covid-19 and the delayed start to the academic school year,” Pepkor said. “From a group perspective, cash sales increased by 10.7 percent while credit sales decreased by 3.8 percent.”
The group said its credit contribution to total group sales reduced to 7 percent for the period, down from 8 percent compared to last year, while credit book collections were at similar levels to those achieved in the comparable pre-Covid-19 period.
Pepkor opened 108 new stores and disposed of 180 stores and 111 John Craig stores during the period. It said its the clothing and general merchandise segment revenue rose 8.1 percent to R26.3bn, with Pep and Ackermans increasing sales 8.8 percent and likefor-like sales increased by 6.9 percent.
The group said both Pep and Ackermans continued to grow market share in a declining apparel retail market.
Pep and Ackermans opened 65 new stores and expanded retail space by 2.6 percent year-on-year.
Pep Africa increased constant currency sales by 7.1 percent, while likefor-like sales increased 13.1 percent and said that in South African rand terms sales declined by 12.1 percent due to the weakening of local currencies and strengthening of the rand.
Pepkor operates segments such as Tenacity, speciality business, furniture, appliances and electronics and fintech.
Its building company segment has been reported as a discontinued operation and it achieved a 9.6 percent increase in sales, with like-for-like sales up by 11.7 percent.
The group expects to release half-year results next month.
Pepkor shares rose 5.15 percent on the JSE yesterday to close at R16.32.
BUSINESS REPORT