Cashbuild, the largest retailer of building materials and products, was severely impacted by the looting of 34 of its stores in July last year, but it kept expenses under control and is ready to tackle what appears to be weakening consumer spending environment. Photo: Simphiwe Mbokazi
CASHBUILD, the largest retailer of building materials and products, was severely impacted by the looting of 34 of its stores in July last year, but it kept expenses under control and is ready to tackle what appears to be weakening consumer spending environment.
This was according to operations director Shane Thoressen, who was interviewed at the release of the interim results for the six months to December 31, 2021, where revenue fell by 12 percent to R5.89 billion from R6.69bn. Excluding the looted stores, revenue fell by 5 percent to R5.66bn from R5.94bn.
Revenue for stores in existence prior to July 2020 declined by 14 percent, while the 12 new stores since July 2020 contributed 2 percent growth. Selling price inflation was 8.8 percent.
Despite gross profit decreasing by 11 percent to R156bn, the gross profit margin increased to 26.6 percent from 26.4 percent.
Thoressen said they were pleased to have achieved an 8 percent return on sales, as this figure was normally between 5.5 and 5 percent.
He said this return, however, was not sustainable, and he expected it could be anywhere between 5 and 8 percent in future.
He said operating expenses were well controlled considering the lower revenue, and reduced by 10 percent, resulting in the operating profit decreasing by 14 percent to R492m. Excluding looted stores, operating profit fell 7 percent to R465m.
Cashbuild opened two new Cashbuild stores, refurbished five Cashbuild stores and relocated one Cashbuild store.
Thoressen said, more generally, that there was still scope to open more Cashbuild stores in the country, although the opportunities from new shopping centre developments were becoming few and far between.
Three looted Cashbuild stores and one P&L Hardware store were closed when their leases ended. Of the stores looted, 25 Cashbuild stores and three P&L Hardware stores had since been reopened. There were still four stores at shopping centres that were not reopened, but these shopping centres had been severely damaged and might only reopen next year.
Headline earnings per share declined by 27 percent.
The dividend cover of 2.0 times was maintained and Cashbuild declared a 19 percent lower interim dividend of 587 cents per share.
Cash and cash equivalents fell 33 percent to R1.88bn, mainly as a result of the substantial final dividend paid and costs of looted stores not yet recovered from insurance.
Net asset value per share decreased by 5 percent to 9 175c.
Cashbuild submitted insurance claims of R143m for inventory, R71m for property, plant and equipment, and R65m for business interruption to its respective insurers from the looting and to date R214m had been received relating to stock and asset claims.
Group revenue for the six weeks post the half year-end was 10 percent lower than the comparative prior six weeks period.
Chief executive Werner de Jager said: “Management expects trading conditions to remain challenging due to the ongoing long-term effect of Covid-19 and the high unemployment rate.
“Inflation is expected to remain at high levels, impacting the affordability of products and placing pressure on sales growth.”
The share price softened 2.21 percent to R271 yesterday morning, extending the decline in the price over 12 months to more than 14 percent.
edward.west@inl.co.za
BUSINESS REPORT ONLINE
Related Topics: