South Africa's SPAR FY earnings rise on cost controls amid tough markets
JOHANNESBURG - South African retailer and wholesaler SPAR Group said on Wednesday its normalised annual profit rose 10%, helped by tight margin management and cost controls in the face of poor consumer sentiment in all of its markets.
SPAR, a grocery chain which also sells building materials and medicines in southern Africa, has been expanding into Europe amid a weak economy at home, but has also faced troubles in its newer markets such as Ireland and Switzerland.
The company said all indicators suggest consumer finances will stay under pressure in southern Africa, while issues like Brexit will continue to hurt its newer businesses.
“Despite the current consumer concerns across all trading environments, the group is satisfied that it remains well positioned to create continued value for shareholders,” the company said in a statement.
SPAR’s headline earnings per share (HEPS), the main profit measure in South Africa, came in at 1,129.1 cents for the full-year ended Sept. 30, higher than 965.7 cents a year earlier.
On a normalised basis, which adjusts for expected future profits, foreign exchange losses and business acquisition costs, HEPS rose by 9.9% to 1,160.6 cents.
In its home market, South Africa, the company faced a stagnant economy, with high unemployment and rising living costs putting pressure on consumers’ wallets. Neighbouring markets like Zimbabwe are also struggling.
The company’s southern Africa division grew turnover by 8%, including the contribution from acquisitions, while SPAR Ireland and SPAR Switzerland grew turnover by 6.2% and 1.2%, respectively.
Brexit has sapped consumer confidence in Ireland and south western England, where SPAR also operates, and aggressive marketing initiatives in Switzerland failed to deliver the expected turnover, SPAR said.
Since the end of the reporting period, the retailer said it had acquired a 50% stake in a southern African food wholesaler called Monteagle Africa. The purchase is still subject to regulatory approvals.