Steinhoff cut the value of its assets by €15.3 billion (R247.86bn) in the results for the year to the end of September and reported a loss of €3.99bn. File Photo: IOL

JOHANNESBURG – Steinhoff International’s share price tumbled more than 20 percent on the JSE on Thursday, in a belated reaction to its results published when the market closed on Tuesday. 

The JSE was closed on Wednesday for the national and provincial elections.

Steinhoff cut the value of its assets by €15.3 billion (R247.86bn) in the results for the year to the end of September and reported a loss of €3.99bn.

Steinhoff shares responded negatively to these numbers, falling to R1.60 a share – its lowest level in more than five months. The share closed at R2.01 on Tuesday.

Steinhoff revised down its 2017 earnings compared with the 15 months to the end of September 2016 after it admitted to accounting irregularities in December 2017.

It reported a basic loss a share of 95.9 euro cents a share, compared with 7.6 euro cents in 2016.

Industry analysts said that although they expected negative results from the company, the damage was bigger than they had expected.

Ron Klipin, a senior analyst at Cratos Capital, said the results reflected the large scale of additional impairments, which was not surprising considering the lack of accounting transparency.

“In addition, the market was transfixed by the massive deal flow and was oblivious to the massive debt incurred, as well as the risk of bedding down these deals. So the share price is a reflection of the challenges ahead, with the results of 2018 still pending in June, which could give a further shock to the share price,” Klipin said.

Jordan Weir, a trader at Citadel, said the only real positive arising from Steinhoff’s results was that shareholders were finally beginning to see more transparency and honesty from the company, although the large write-offs, impairments and restatements would leave a bitter taste in their mouths.

“Yes, the downward revision in earnings a share more than likely played a large role in the share price’s negative price action on Thursday morning,” Weir said.

He added that, with the inflated intangible issues largely addressed, future financial statements would paint a clearer picture of the path ahead for Steinhoff, particularly in terms of its operational ability.

“Additionally, the current board of directors seems to be doing a decent job of ensuring that a full and accurate account of past wrongdoings is presented fairly to shareholders and stakeholders alike,” Weir said.