Nu-World set for strong profit growth

Nu-World Holdings, manufacturer and distributor of a wide range of consumer goods, looks on track for solid profit growth in the year to end-August.

The group that specialises in consumer electronics, hi-tech equipment, small electrical appliances, white goods, liquor and furniture reported a 16% jump in net profit to R85m with earnings of 399c per share for the half-year to end-February.

Des Mayers, senior analyst at Afrifocus Securities, said the interim showing was “pretty decent”. Nu-World was on track to post 800c per share in earnings for the full financial year.

The group’s core South African operations increased revenue 16% with profits 28% higher, Mayers said. “This shows a nice widening of the margin.”

In commentary accompanying the results, Nu-World CEO Jeffrey Goldberg said that the addition of more models in the consumer electronics division and of categories and brands in the interim period contributed to increased sales.

The group also increased stock holding to assist customers with in-stock positions of fast-moving lines, he said. Liquor sales continued to grow as additional brands and categories were added to the product offering, Goldberg said. Additional single-malt whiskies and a range of flavoured vodkas had been introduced.

In the small domestic appliances and white goods segment, Goldberg said Nu-World had also introduced more product designs and concepts.

Nu-World laboured somewhat with its offshore endeavours, with revenue dropping 10% to R395m.

But profits were held at R30m, which Mayers said indicated an encouraging effort at margin protection.

Goldberg said the Australian operations came under pressure due to the subdued Australasian economy, while business in the hub of Africa, the Middle East, the Commonwealth of Independent States and South America managed to show growth with local currencies strengthening against the dollar.

Goldberg said Uruguay continued to be a strong presence in Latin America.

The distribution network was increased and additional stocks had been ordered for markets in India, Pakistan and Sri Lanka.

One small setback after the reporting period closed was that Nu-World was slapped with an assessed tax payment of R7.6m and penalties of R18.8m for an unnamed subsidiary for the period 2008-12.

The group would oppose the revised assessments, he said.

LIQUOR SALES CONTINUED TO GROW AS ADDITIONAL BRANDS AND CATEGORIES WERE ADDED