IN­TE­GRATED RETAIL BUSI­NESS

Stein­hoff plans African retail list­ing on the Jo­han­nes­burg Stock Ex­change

The Star Early Edition - - BUSINESS REPORT - Ka­belo Khu­malo

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.”

PHOTO: BLOOMBERG

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.

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