Cashbuild hits mark with 42 new stores
R10.2BN: DESPITE CHALLENGING MARKET, RETAILER RECORDS GREAT REVENUE The 42 new stores opened since 2016 largely responsible for 5% increase – CEO.
Group revenue up by 5% to R10.2bn from R9.7bn.
The share price of building materials retailer Cashbuild dropped by 3% on Tuesday, to R303.61, following the release of its financial results for the year ended June 30.
Despite a difficult market with consumers being under severe pressure, the group succeeded in growing its revenue by 5% to R10.2 billion. In the previous financial year, revenue was R9.7 billion. This is the first time revenue has exceeded the R10 billion mark.
Operating profit, however, decreased by 12% to R543 million. And the total dividend for the year dropped by 9% to 842 cents.
The revenue growth was largely contributed by the 42 new stores opened after July 2016. The stores in existence before then showed no change in revenue.
Cashbuild sells directly to a cash-paying customer base. It currently has 318 stores, including seven DIY stores and 60 P&L Hardware stores.
According to chief executive Werner de Jager, it was a difficult year, with results in the second half being worse than in the first.
“Revenue for the stores that were in existence before July 2016 remained at similar levels to last year, with the 42 new stores opened since then largely responsible for the 5% increase,” he said.
De Jager said that against the background of the depressed economy and pressured consumers, selling price inflation was only 2%. Gross profit increased by 4%, with gross profit margin being slightly lower at 25.2%. In the previous financial year, the gross profit margin was 25.5%.
Operating expenses increased by 9%, a third of which can be attributed to existing stores and the balance to new stores. “Nevertheless, the uptick in revenue did not compensate for the increased expenses, resulting in our operating profit decreasing by 12%,” said De Jager.
Basic earnings per share decreased by 10%, with headline earnings per share also decreasing by 9% from the prior year.
He said Cashbuild’s financial position remained solid, with a 14% increase in net asset value per share, from 6 642 cents last year to 7 578 cents. Cash and cash equivalents increased by 19% to R953 million (2017: R801 million).
During the year, Cashbuild added 25 new stores (11 Cashbuild and 14 P&L Hardware), refurbished 27 stores and relocated six Cashbuild stores.
De Jager said the group would continue with its store expansion, relocation and refurbishment strategy “in a controlled manner, applying the same rigorous process as we have in the past”.
The group expected trading conditions to remain challenging in the near to medium term.
Gross profit margin slightly lower at 25.2%,