Massmart shares show a healthy rise on the bourse
MASSMART rose nearly 10 percent on the JSE yesterday despite recording marginal growth for the year to December.
The shares were 8.81 percent higher yesterday to close at R155 on the JSE – up from Wednesday’s closing price of R142.45 a share. Massmart is Africa’s second-largest retail group after Shoprite, with 423 stores across 13 sub-Saharan countries.
Total sales grew 1 percent to R92.1 billion during the period, while comparable store sales declined 0.8 percent.
Headline earnings increased by 1.6 percent to R1.3bn.
Earnings before interest, tax, depreciation, amortisation and impairments declined by 0.6 percent to R3.6bn, while headline earnings increased by 1.6 percent to R1.3bn.
Headline earnings a share was as up by 2.1 percent to 618.8 cents a share. The group declared a total dividend of 347c a share, up by 16.1 percent compared with last year.
Chief executive Guy Hayward said very weak consumer confidence resulted in lower demand for durable goods, significant deflation in most major commodities impacted the wholesale business and they were negatively affected by generally weaker African economies and currencies. “While these headline figures are indicative of the exceedingly difficult consumer environment that persisted in the period, they mask a much-improved performance in the second half of 2017,” Hayward said.
The group said while the constrained consumer environment had a significant impact on the general merchandise sales and home improvement categories, they were pleased that they continued to increase market share in durable departments, including major appliances, audio-visual, information technology and gaming.
“This market share growth ensures Massmart is well positioned for an upturn in the consumer environment. Growth in Food & Liquor sales was also pleasing, with many food and grocery categories growing ahead of the market, including convenience instant meals, cereals, snacks and carbonated drinks,” Hayward said.
Massmart operates four divisions: Massdiscounters, Masswarehouse, Massbuild and Masscash.
Massdiscounters’ trading profit before interest and tax decreased by 4.4 percent to R373.5 million. The group remain focused on its fresh roll-out, with 72 Game stores in South Africa and 17 in other African countries now offering this category, resulting in Food & Liquor sales participation of 23 percent.
Masswarehouse benefited from the defensive product mix with a 5.9 percent total sales growth in Food & Liquor while general merchandise sales growth grew by 0.1 percent. The group opened its 21st Makro store in Fourways.
Massbuild delivered the best performance in the South African DIY and Home Improvement sector by growing total sales by 2.4 percent to R13bn with comparable sales increasing by 1.6 percent.
Masscash total sales increased by 0.4 percent to R31.9bn.