Spar Group posts growth despite some losses abroad
GROCERY chain Spar Group pointed to diversification of its operations into international markets yesterday as it reported positive growth for the six months to March 31 despite Spar Switzerland incurring an operating loss of R8.3 million.
Reported turnover was up 12.6% to R47.4 billion, compared with R42.1bn last year, with 31.4% of total turnover generated in foreign currency.
Profit after tax improved 10% to R908m, up from R825.4m last year, due to lower effective tax rates in Ireland and Switzerland.
But Spar’s southern African business, with reported turnover growth of 4.9% to R32.5bn from R31bn last year, was impacted by tough trading conditions, which are being aggravated by the uncertain economic and political landscape.
Spar chief executive Graham O’Connor said the tough trading environment in South Africa was likely to persist for the rest of this year, particularly with the political uncertainty undermining consumer and business confidence.
The retail turnover of TOPS at Spar increased 9.1% to R5.2bn from R4.7bn in 2016, as growth was impacted by competitors’ aggressive entry into the liquor market.
The group incurred R213.3m in capital expenditure for operational investments in southern Africa to expand the perishables facilities at the North Rand and Western Cape distribution centres, IT infrastructure upgrades and software development.
Spar said the capital expenditure budget in southern Africa for the next six months was about R500m and included land purchases for future expansion at the KwaZulu-Natal distribution centre and for the construction of a distribution centre west of Johannesburg.
Headline earnings per share declined marginally by 0.9% to 475.5 cents, from 480 cents last year.
The board approved an interim dividend of 240 cents out of income reserves.