Stronger earnings boost Cashbuild shares
Cashbuild shares rose by more than 13 percent on the JSE yesterday morning after Southern Africa’s largest retailer of building materials and associated products reported strong interim earnings boosted by people buying its products during the lockdown as they fixed up their homes. The firm hiked its dividend by 66 percent.
Cashbuild shares closed 3.91 percent higher at R311.21 on the JSE yesterday.
For the six months to the end of December, Cashbuild reported a 113 percent increase in basic earnings per share to 1 595 cents a share, and headline earnings per share rose 102 percent to 1 541c.
As a result, Cashbuild declared an interim dividend of 724c a share, up 66 percent compared with 435c declared a year earlier.
Chief executive Werner de Jager said the lockdown allowed them time to refocus on their key business drivers and to prepare for the uncertain times ahead.
“The favourable trading conditions, combined with our diligent execution, allowed us to deliver these sets of results. Management expects trading conditions to remain uncertain for the remainder of the financial year due the ongoing Covid-19 pandemic and its economic impact,” De Jager said.
Revenue increased 21 percent to R6.7 billion, with stores in existence before July 2019 increasing revenue by 19 percent, while the 14 new stores since July 2019 contributed 2 percent revenue growth.
Cashbuild had a network of 317 stores at the end of the period. The group opened three Cashbuild stores, refurbished 11 Cashbuild stores and one P&L Hardware store.
It relocated two Cashbuild stores and one P&L Hardware store and closed one Cashbuild and three P&L Hardware stores at the expiration of their lease agreements.
Cashbuild operations director Shane Thoresson said the group was pleased with the performance during this time of economic uncertainty.
“It is possible that our customers had extra cash to spend after the reduction of interest rates and increase in grants last year. The Covid-19 outbreak also forced people to work from home, so they spent a lot of hours fixing their homes, which resulted in them buying our products,” Thoresson said.
He said the group would continue its store expansion, relocation and refurbishment strategy in a controlled manner, applying an even more rigorous process, due to the Covid-19 pandemic and associated economic uncertainties. Its operating profit increased 92 percent to R576 million and cash and cash equivalents increased 101 percent to R2.81bn.
The group’s revenue continues to gain momentum, increasing by 24 percent in the six weeks after the reporting period. However, management expected trading conditions to remain uncertain.