INTEGRATED RETAIL BUSINESS
Steinhoff plans African retail listing on the Johannesburg Stock Exchange
DUAL-listed Steinhoff International said yesterday that depending on market conditions and regulatory approvals, it planned to complete the listing of its African retail business on the JSE by the end of the third quarter of the year. The group moved its primary list to Frankfurt from the local bourse just two years ago.
Markus Jooste, the chief executive of Steinhoff, said that listing its African business separately from the rest of the group would add more value to the business.
Steinhoff’s shares were down 5.67 percent yesterday on the JSE to close at R65.50.
“Providing an independent valuation of the African business should assist investors in valuing the emerging markets businesses of Steinhoff and provide a separate point of entry for emerging market investors,” Jooste said.
The plans to spin-off its African business was first muted after the group failed in its attempt to merge with Shoprite.
Its African retail business include Pepkor, JD Group, Unitrans Automotive, Tekkie Town, Poco South Africa and Steinbuild.
Riaan Gerber, a portfolio manager at Sanlam Private Wealth, said that if the group lists its African business separately that would unlock value in the business and attract investors.
“If the company does proceed in listing its African business separately, it would attract investors that do not necessarily want to be exposed to markets such as the US and Australia. From a valuation point of view it would move the share price in the right direction,” Gerber said.
The group’s revenue for the six months ended March shot up by 48 percent to €10.1 billion (R145.22bn), while the operating profit went up 13 percent to €903 million in the period.
The company said it had opened an additional 413 stores in the period, excluding acquisitions. The new stores included 52 new Pep stores in South Africa.
The group’s integrated household goods segment increased revenue by 39 percent to €6.3bn in the period, while retail business, excluding supply chain, grew its revenue by 47 percent to R5.8bn.
The group also reported underwhelming results from its UK business in the period, with sales falling 19 percent to €325m from €401m in the corresponding period.
The group attributed this to 14 percent devaluation in the pound and challenging postBrexit environment and store closures in the UK.
Jooste said the company’s recent acquisitions were paying off for the group.
“In our second year since listing on the Frankfurt Stock Exchange, we are focused on the implementation bedding down our recent acquisitions, while the organic performance of the business remains solid.”
The acquisition-hungry group has made no less than six acquisitions since December 2016.
Jooste said that he still believed that strategically the decision to part with Tempur-Sealy was the best longterm strategy for the business in the US.
“Following the termination of the supply agreement Tempur-Sealy in January, Mattress Firm communicated its intention to phase out the Tempur-Sealy brand in the beginning of our fiscal third quarter. Although this creates short-term disruption in our business,” Jooste said.
Tempur-Sealy, the mattress maker, earlier this year announced that it had terminated its contracts with its biggest customer, Mattress Firm, after disagreements over proposed changes that required “significant economic concessions.”
A Steinhoff International Holdings logo outside the company’s offices in Stellenbosch. The company plans to list its African retail business on the JSE by the end of the third quarter of this year.