Industry data during the period for general retail sales of hardware, paint and glass products sales had fallen 6%, while peer Build It’s turnover was up 0.5%, and Italtile’s sales fell 2%, said Cashbuild operations director Shane Thoresson in a telephone interview. Picture: Simphiwe Mbokazi / Independent Newspapers.
Cashbuild, a southern African building materials retailer with 321 stores, at the least maintained market share in the difficult cash-paying consumer market and lifted turnover 2% to R5.8 billion in the six months to December 24.
Industry data during the period for general retail sales of hardware, paint and glass products sales had fallen 6%, while peer Build It’s turnover was up 0.5%, and Italtile’s sales fell 2%, said Cashbuild operations director Shane Thoresson in a telephone interview.
He said that while the interim results were not that great from a financial perspective, the balance sheet remained strong and the group did well considering the macroeconomic challenges.
The half-year dividend was 19% lower at 325 cents per share.
Revenue for the 312 stores opened prior to July 2022, grew by 1%. Gross profit was at similar levels, while the gross profit margin fell to 24.7% from 25.3%. Selling price inflation was 3.2%, compared to the prior period.
Three new stores were opened, two Cashbuild and one P&L Hardware, and three Cashbuild stores were refurbished.
Cashbuild’s share price fell 4.18% to R137.50 yesterday morning, contributing to a 27% decline from R188.40 at the same time a year ago.
Thoresson said the firm did well to manage expenses. The first half was a consolidation phase. For instance, staff numbers fell 10% through natural attrition and a moratorium on new hires. In addition a number of projects were under way, including a small model store concept that was being rolled out.
Operating expenses, excluding a R137 million impairment of the P&L Hardware goodwill and trademark as there was little chance of it performing to earlier expectations soon, increased by 7% (existing stores increased by 5%) to R1.4bn. Operating profit, excluding the impairment, fell by 29% to R187m.
Thoresson said the good thing about the impairment was the write-off was behind them and P&L would not have such a big impact on group profitability in the future.
Cashbuild’s headline earnings per share decreased by 20% from 694c. Cash and cash equivalents fell to R1.6bn due to higher stock levels and the repurchase of shares in the second half of the prior year. Stock levels, including new stores, had increased by 10%.
Thoresson said the firm did not expect the consumer environment to improve in the second half, particularly also due to the uncertainty surrounding the election.
The group had initially expected “pleasing” trade in the second quarter, to continue into the third quarter, but this had not occurred. Group revenue for the six weeks after the end of the interim period was at similar levels to the prior year’s comparative six-week period.
CEO Werner de Jager said in a statement: “Our results are testimony of the financial strain of the consumer, exacerbated by continued load shedding and above inflationary cost increases. For the foreseeable future, we are expecting trading conditions to remain challenging, with the upcoming elections further contributing to the uncertainty.”
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