Cashing in on boom in home improvement

Cashbuild – the cash-flush listed retail building materials giant – posted a strong set of interim results for the six months ended 27 December, 2020, yesterday.

Most key financial metrics showed double-digit growth as the group got a boost from the ongoing pandemic-induced home improvement boom.

The 317-store group (including 58 P&L hardware stores) reported a 21% increase in revenue and a gross profit increase of 29% for the period – which also saw its gross profit margin percentage increasing from 24.8% to 26.4%.

Cashbuild’s headline earnings per share (Heps) more than doubled (102%), compared to its prior period, from 762.4 cents (2019) to 1 540.7 cents.

This resulted in the group declaring an interim dividend of 724 cents (2019: 435 cents) per ordinary share, which it noted “came out of income reserves”.

The interim dividend is 66% up on the comparative half-year.

Cashbuild, which agreed to buy Pepkor’s Buco (the building company) chain for R1.07 billion in August last year, said that its cash and cash equivalents increased to just over R2.8 billion for the period.

It added that the increase came as a result of “increased profitability and higher creditors’ balances due to suppliers’ payments effected after half-year close”.

“Operating expenses, including new stores, were well controlled considering the revenue growth, increasing by 11% [existing stores 9% and new stores contributed 2% of the increase], resulting in the operating profit increasing by 92%,” the group noted.

“During the period, Cashbuild opened three Cashbuild stores, refurbished 11 Cashbuild and one P&L hardware stores and relocated two Cashbuild and one P&L hardware store,” it said, adding that one Cashbuild and three P&L stores were closed following the expiration of lease agreements.

The group highlighted that revenue for the six weeks post its half year-end has increased 24%, compared to the same period in the prior year.

However, Cashbuild sounded a cautious note at the end of its JSE interim results statement.

“Management expects trading conditions to remain uncertain due to the ongoing Covid-19 pandemic and its economic impact,” it said.