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MarketScreener Homepage  >  Equities  >  Johannesburg Stock Exchange  >  The SPAR Group Ltd    SPP   ZAE000058517

THE SPAR GROUP LTD

(SPP)
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S.Africa's SPAR posts profit rise despite consumer pessimism

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11/13/2019 | 03:45am EDT
FILE PHOTO: Logo of retailer Spar is seen in front of a supermarket in Schaenis

South African retailer and wholesaler SPAR Group said on Wednesday that normalised annual profit rose 10% in its latest financial year as it rode out poor consumer sentiment across all of its markets, sending its shares up more then 6%.

SPAR, a grocery chain which also sells building materials and medicines in southern Africa, has been expanding in Europe amid a weak economy at home, but has also faced troubles in newer markets such as Ireland and Switzerland.

SPAR Group CEO Graham O'Connor said the economic backdrop was starting to improve in South Africa, its biggest market. Sentiment should improve further, he added, as investment pledges encouraged by President Cyril Ramaphosa materialise to spur economic growth and reduce unemployment.

"We're hoping that by the middle of next year some of the investment that has been promised has been made already and more will come. Those are all positive things," he told Reuters via phone.

SPAR's headline earnings per share (HEPS), the main profit measure in South Africa, stood at 1,129.1 cents for the full-year ended Sept. 30, higher than 965.7 cents a year earlier.

On a normalised basis, which adjusts for expected future profits, foreign exchange losses and business acquisition costs, HEPS rose by 9.9% to 1,160.6 cents.

The company's shares were 6.3% higher by 0830 GMT.

In its home market, SPAR faced a stagnant economy, with high unemployment and rising living costs putting pressure on consumers' wallets. However, it managed to grow turnover in its southern Africa division by 8% - a result O'Connor said was "excellent" given the circumstances.

Meanwhile, uncertainty surrounding Britain's exit from the European Union sapped consumer confidence in Ireland and south western England, where SPAR also operates, it said. That unit still grew turnover by 6.2%, however.

The worst performing unit was SPAR Switzerland, where turnover grew just 1.2% after aggressive marketing initiatives in the first half of the year failed to increase turnover.

"We didn't do it cleverly," O'Connor said. "It was actually poor on our behalf, we put too much emphasis on the deep cuts."

SPAR said tight margin management and cost controls had helped boost profits, with costs rising at a slower rate than revenues in both South Africa and Switzerland.

Since the end of the reporting period, the retailer said it had acquired a 50% stake in a southern African food wholesaler called Monteagle Africa. The purchase is still subject to regulatory approvals.

(Reporting by Emma Rumney; Editing by Clarence Fernandez, Aditya Soni, Kirsten Donovan)

Stocks mentioned in the article
ChangeLast1st jan.
DOW JONES AFRICA TITANS 50 INDEX 0.79% 429.26 Delayed Quote.-20.73%
DOW JONES SOUTH AFRICA(ZAR) 0.00% 1525.42 Delayed Quote.-15.45%
S&P AFRICA 40 INDEX -0.02% 137.59 Delayed Quote.-20.65%
SPAR GROUP, INC. 0.88% 0.6962 Delayed Quote.-46.45%
THE SPAR GROUP LTD -1.21% 175.98 End-of-day quote.-10.90%
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Financials (ZAR)
Sales 2020 119 B
EBIT 2020 2 627 M
Net income 2020 1 813 M
Debt 2020 7 071 M
Yield 2020 4,35%
P/E ratio 2020 19,2x
P/E ratio 2021 14,0x
EV / Sales2020 0,34x
EV / Sales2021 0,31x
Capitalization 33 247 M
Chart THE SPAR GROUP LTD
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Technical analysis trends THE SPAR GROUP LTD
Short TermMid-TermLong Term
TrendsNeutralNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 10
Average target price 202,65 ZAR
Last Close Price 175,98 ZAR
Spread / Highest target 32,1%
Spread / Average Target 15,2%
Spread / Lowest Target 2,28%
EPS Revisions
Managers
NameTitle
Graham Owen O'Connor Group Chief Executive Officer & Executive Director
Michael John Hankinson Non-Executive Chairman
Mark Wayne Godfrey Group Finance Director & Executive Director
Enno Paul Stelma Group Head-Information Technology
Phumla Mnganga Independent Non-Executive Director
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