Spar boss applauds Ramaphosa effect

The CEO of SA’s second largest grocer by turnover says it is already seeing the positive effect of President Cyril Ramaphosa’s investment drive, with sales rising after its latest set of results.

Spar Group chief executive Graham O’Connor said the government’s effort to foster an environment that’s friendlier to business is a move in the right direction and should be supported. “Government is listening to business.”

Since becoming president earlier in 2018, Ramaphosa has made it his priority to turn around the struggling economy by getting local and foreign businesses to commit to investing billions of rand in it.

O’Connor said these efforts were starting to pay off, as the move had triggered a change in sentiment, with sales firming up since the end of its financial year in September. “They got better after that.”

Overall turnover rose 6% to R103bn and operating profit jumped 7.9% to R2.78bn for the period. The group has operations in Ireland and Switzerland, but the performance of its Southern Africa operation, which increased turnover 6.7% to R68.8bn, was the biggest growth driver.

O’Connor may be seeing the early shoots of an economy on the mend, but Sasfin Bank senior equity analyst Alec Abraham was more circumspect. Abraham said he did not think the government was doing nearly enough to fix the economy.

The latest Statistics SA Retail report for September showed how much pain the retail sector was still going through, with retail sales up only 0.7% year-on-year for the month.

Against this background, O’Connor said he was happy with the group’s local operations, driven largely by the performance of its liquor, pharmaceuticals and DIY operations.

Spar's purchase of pharmaceuticals wholesaler S Buys for R74.9m a year ago made a notable difference, said O’Connor. He said it had never really made a profit, but the inculcation of S Buys now enabled its pharmacies to source more affordable products.