Tag: results

Prospects for the retail sector remain weak and are unlikely to improve in 2017, as confirmed by Massmart’s interim sales update released on Monday.

In the 26 weeks to June 25, Massmart recorded R42.5bn in sales, representing an increase of 0.5% compared with the year-earlier period. Comparable store sales fell 1.6%. Product inflation was estimated at 3.2%.

Massmart’s share price initially dipped more than 2% after the announcement, but bounced back into marginally positive territory. “I don’t know if there was anyone who was massively disappointed by the update,” said Old Mutual Investment Group consumer and industrial sector analyst Brian Pyle.

“Nobody really expected anything else other than what Massmart reported today. People are expecting tough times and the update shows it. That said, these numbers are weak.”

Comparable store sales fell at most of the company’s trading divisions. Like-for-like sales fell 3.5% at Massdiscounters, by 0.2% at Massbuild and 3.3% at Masscash. Masswarehouse grew comparable sales by 1.5% with inflation of 3.9%.

Mergence Investment Managers portfolio manager Peter Takaendesa said the food side of the business performed better than nonfood categories. Sales growth in food was 3%. In general merchandise it fell 2.9%.
“As we saw in the recently reported Woolworths numbers, the trend of better food sales relative to nonfood consumer goods is evident in Massmart’s numbers. Consumers are largely in survival mode and discretionary items have to take a back seat for now,” he said.

The biggest concern for all retailers was the downward trend in growth rates to levels much lower than cost inflation. This came at a cost to profit margins, said Takaendesa.

For Massmart, he expected a technical improvement in the sales rate for the rest of the year, but a stronger recovery was only likely later in 2018 “and could be better if we get an interest rate cut sooner to help consumer confidence recover”.

“It’s going to be difficult for Massmart’s turnaround efforts to show the intended results given much weaker consumer spend and the mid-long term risks posed by independent e-commerce rivals such as Takealot, which need to be monitored closely,” he said.

Ashburton Investments said that it preferred Woolworths in this sector.
Woolworths said it expected its adjusted headline earnings per share for the year to June 25 to fall between 5% and 10%.

“Massmart’s update shows the really poor consumer environment in SA,” said Ashburton portfolio manager Wayne McCurrie. “This is not unique to Massmart. All consumer firms are suffering the same — a subdued consumer in recession.”

McCurrie said the performance of Massmart’s food division was reasonable and the performance of the nonfood goods was “terrible”, but that the market knew this after SA fell into recession.

Pyle said the next six months were not going to be any better for any retailer, but that the sector could see recovery in 2018.

By Colleen Goko for Business Day

Game vital to Massmart’s revival

Massmart could finally be starting to deliver after nearly a decade of less-than-inspiring results.

But the revival of the R91-billion annual sales Walmart-controlled retailer’s fortunes is far from being a slam dunk.

Massmart certainly pleased the market in its annual results announcement of a 15.8% rise in headline EPS (HEPS). This was greeted by a 16% rise in its share price.

Massmart’s pricey 25 p:e indicates that more of the same is expected. A big swing factor will be its ability to continue driving a recovery in its Massdiscounters division, which houses Game, one of the group’s flagship brands.

“Game is key to the Massmart investment case,” says Warren Jervis, manager of the Old Mutual Small & Mid Cap fund.

The signs are positive for the 165-store discount division. It came to the party in 2016, lifting profit before interest and tax (PBIT) by R129m (54.8%) to R364m.

It accounted for just under half the group’s total R264m rise in PBIT to R2.61bn.

The division’s 5.3% rise in sales to R20.5bn was nothing to rave about. Doing the heavy lifting was a rise in the PBIT operating margin from 1.2% to 1.8%.

But there is still a long way to go if Game is to return to its former glory when, at its peak in 2011, it delivered PBIT of R744m and a 5.6% operating margin.

Then the wheels started coming off. Key reasons for this included ageing stores and a failure to keep pace with a rapidly changing consumer electronics landscape. At its worst in 2014, the division’s PBIT stood at R181m.

Jervis believes Game’s recovery still has long legs. “There is no reason it cannot get its margin up to at least 3%,” he says.

It would make a big difference. On a 3% margin, Game’s PBIT contribution in 2016 would have been R615m.

A key factor in upping margins will be the rollout of Game’s SAP point of sale and enterprise resource planning systems.

“It will provide visibility of profit per product line,” says Sasfin Securities analyst Alec Abraham. “It will enable Game to fine-tune its product mix.”

Game’s turnaround was engineered by Massmart veteran Robin Wright, who stepped down as
divisional CEO in August 2016.

Tasked with the next recovery phase is Albert Voogd, who joined Massmart from Ahold, the Netherlands’ largest food retailer.

The selection of Voogd ties in well with Massmart’s big ambitions in food retail. There is already a notable swing in Game’s product mix to food and fresh produce which, together with a recently added liquor offering, accounted for 23% of Game’s sales in 2016.

This was up from 21.8% at the June interim stage.

Abraham agrees that Massmart can continue driving food retail sales at a well-above-market pace. In its favour, he notes, is a small market share of 2%-3% across its Game, Makro, Cambridge and Rhino brands.

But he has concerns about the general state of SA’s beleaguered consumer market.

“It does not support Massmart’s [big-volume, low-margin] business model.”

The signs of strain are already there, not least in the group’s largest division, Masswarehouse, which houses 20 Makro megastores.

While Makro did exceptionally well in 2016 to lift sales by 11%, it came at the cost of big margin pressure; PBIT of R1.25bn came in just 4.4% higher than 2015.

Taking even more strain was the Massbuild division, housing 102 stores under brands including Builders Warehouse and Builders Express. Sales for the year came in 5.6% up at R12.7bn, while PBIT — hit by margin squeeze — was up only 2.7% at R712.6m. More concerning is the fact that second-half PBIT was up a mere 0.7% year-on-year.

For Massmart, 2017 did not get off to a good start. In the eight weeks to February 19 the group reports total sales up a mere 0.6% and comparable (same store) sales down 1.5%.

It represents a significant slowdown against the previous three years. On a comparable sales basis, sales in the first eight weeks of 2016, 2015 and 2014 were up 6.9%, 7.9% and 7.7%, respectively.

Against the likes of Woolworths, trading on a 16 p:e, and even Shoprite on a 20 p:e, Massmart’s 25 p:e is looking decidedly stretched.

By Stafford Thomas for www.businesslive.co.za

South Africa pushes up BIC’s figures

French writing instruments vendor, BIC, has reported strong Q4 growth. According to the company, stationery sales increased by 7.8% to €165.6-million.

Sales were high in emerging markets such as South Africa and Brazil, owing to the back-to-school season, while in India sales also improved. The company reported mid-single digit growth in Europe and high-single digit growth in North America.

Overall, FY2016 sales for the Stationery division increased by 5.2% in constant currency to €736.6 million. Stationery volumes increased 1.5% to 6.9 billion units in 2016.
Looking ahead into 2017, the firm outlined priorities to deliver organic sales growth and gain market shares in the division through new product launches, increased R&D investment and new emerging channels such as e-commerce in developed countries.
Meanwhile in its Graphic arm, Q4 sales fell 13.6% to €94.6 million. Full-year sales also dropped, registering a 1.9% fall to €311.5 million.
BIC’s overall full-year sales rose 4.9% to €2.03 billion, while pre-tax profit dropped 10.7% to €408.1 million.
Earlier this month, BIC revealed that a strategic review of its promotional products unit would hit group FY2016 profits. The company has now revealed a €48.4 million hit from these operations.
Bruno Bich, chairman and CEO, says: “Our solid 2016 results are further testimony to the quality and strength of our business model. In a fast-moving and challenging market environment, such as in Shavers in the US, net sales growth was robust and consistent across all consumer categories. Despite the planned increase in operational investment, normalised income from operations remained healthy.
“In 2017, the volatility of currencies and the unpredictable global environment will require increased levels of agility from our teams to ensure continued success. We plan to deliver mid-single digit organic growth in Net Sales. We will continue to launch new products and strengthen our distribution, with a focus on e-commerce in developed markets.
“To enhance long-term growth, we plan another year of selected investments in R&D, CAPEX and Brand Support. The total impact of these investments on Normalized Income From Operations margin will be approximately -100 basis points compared to 2016, excluding major currency fluctuations.”

Source: www.finance.yahoo.com

Massmart holds steady in turbulent times

A sales update from Massmart has revealed so-so results, but in these trying times that’s just a couple of notches down from a howling success.

Sales were up 7,7% to R91,3-billion in the 52 weeks to 25 December, ahead of product inflation of 6,7%, but down from market expectations, and from last year’s performance (growth of 8,4% against product inflation of 3%).

Masswarehouse – that’s Makro to the rest of us – grew fastest, at 11%, while Masscash (Cambridge, Jumbo and so on) grew at 7,5%, although this was beaten down by internal inflation of 9,3%.

Massdiscounters (Game, DionWired) came in at 5,3%, while Massbuild somewhat disappointingly trundled home at 5,6%.

While there was an uptick in sales at home, they declined elsewhere, vindicating the decision to take it easy in Africa.

Source: Trade Tatler

Bidvest CEO pleads for economic stability

Bidvest has released its first results since unbundling its food division into separately listed Bidcorp in May.

The previous year’s figures were restated, with the divisions now housed in Bidcorp accounted for as discontinued operations.

The smaller group says revenue for the year to end-June grew 3.5% to R91.8bn but aftertax profit for the year from continuing operations fell 28.5% to R2.4bn.

A final dividend of R2.32 was declared, taking the dividend for the year to R7.14. Although down from the previous year’s R9.09, the company says this “needs to be viewed in the context of the interim dividend of R4.82 which was paid as part of the larger group, prior to unbundling”.

CEO Lindsay Ralphs included in his commentary an appeal for an end to disruption of key economic institutions.
“As one of SA’s largest employers and a significant investor in the local economy, Bidvest shares the concerns that have been raised by business leadership relating to the ongoing disruption of some of our country’s most important economic institutions. We appeal for a rapid resolution of this current state of affairs.”

Under its new structure, Bidvest fields seven divisions. Of these, freight is the biggest revenue generator but services division is the biggest trading profit centre.

Freight contributed nearly a third of the turnover Bidvest earned in SA. While most of Bidvest’s operations outside SA are now housed in Bidcorp. The group retained Bidvest Namibia, which added R4.3bn turnover to the R90bn contributed by its South African operations.

“Global freight trade remained depressed, and as a consequence, volumes declined. This division’s focus in 2016 has therefore been on innovation and flexibility in an effort to contain costs and enhance efficiencies. The 3.8% decline in trading profit is considered satisfactory given the significant decline in the movement of commodities — particularly minerals — out of the country. Grain imports assisted marginally in the last quarter. The continued import of grain will be positive for this division in the new financial year,” the results statement said.

While freight contributed a third of South African turnover, it contributed a fifth of operating profit. Services was nearly the opposite, contributing 19% of South African turnover and 29% of operating profit.

Brands within the services division included BidAir, Security, Cleaning and Bidtrack, which all posted excellent results, the company said in its statement.

Bidvest’s financial services division reported the fastest turnover growth of 64% to R3.3bn while its trading profit grew 10.4% to R582m.

“Bidvest Bank improved trading profit by 30%, and the insurance company performed satisfactorily, but was impacted by the decline in the mark-to-market profits of its equity portfolio. This division posted an overall increased trading profit of 10.4%,” Bidvest says.

Its commercial products division grew turnover 42% to R5.9bn and trading profit 42% to R745m.
This division was boosted by the acquisition of Plumblink and it is in the process of acquiring Brandcorp.
pic

“The result was slightly below my expectation — closer to indifferent than bad,” Avior Capital Markets analyst Mark Hodgson says. “The outlook should be for growth assisted by acquisitions.”

Ron Klipin, a portfolio manager at Cratos Capital, says the results were in line with expectations. “Bidvest is a different entity, having unbundled its global food division, which now has a market cap of R90bn, against Bidvest’s R51bn.”

“The sum of the parts is now greater than the original Bidvest Group, having unlocked value for shareholders. Bidvest is now a diversified industrial business, with seven entities, ranging from services to trading divisions and substantial property holdings,” he says.

“The diversification is a positive aspect, with no segments having more than a 30% contribution,” Klipin says. He said services made up 56% of trading profits, with the trading distribution division making up the rest.

Good cash flow from operations and gearing of 26% gave Bidvest plenty of scope for acquisitions, both in SA and abroad.

Meanwhile, noncore assets such as Comair, Adcock Ingram and Bidvest’s remaining share in India’s Mumbai Airport could soon be disposed of “at the right price”.

“Lazy assets, which do not contribute benchmark returns, could also be on the chopping board,” he says, adding that this would probably not include property assets — their profits contributed about R300m.

By Robert Laing with Mark Allix for Bdlive

Bidvest, whose business spans pharmaceuticals, auto showrooms, shipping and catering, said diluted headline earnings per share totalled 1,001.5 cents in the six months to end-December, compared with 886.3 cents a year earlier.

The group said tough trading conditions at home, where sales grew by only 3%, weighed on its results, but its food services business showed exceptional growth in Britain, Europe and some of China’s large cities.

Office and print

The consolidated business, combining Office and Paperplus, achieved satisfactory results, with turnover 3,5% higher at R5,2-billion (2014: R5-billion) and trading profit up 24,7% at R415,3-million (2014: R333,1-million).

Lithotech was buoyed by export income and changes to its service mix. Bidvest Data created a competitive advantage from the shift to electronic communication. Bidvest Packaging maintained strong momentum after a period of consolidation. Rotolabel achieved a pleasing turnaround, as did Silveray. Kolok performed strongly, with rand weakness contributing to its results.

Performance at Waltons continued to disappoint. A strong performance was put in by Konica Minolta. Zonke Monitoring Systems again did well. Among the furniture businesses, Cecil Nurse performed exceptionally well and the furniture contribution was well above budget.

“The average rand exchange rate weakened against sterling and the euro, resulting in a 3,7% benefit to trading profit,” the company said.

Bidvest announced earlier this month that it plans to list its food services business separately on the Johannesburg Securities Exchange.

In the half year to 31 December, 2015, Bidvest achieved 13% growth in headline earnings per share (HEPS) to 1 001,5 cents despite challenging trading conditions, particularly in Southern Africa.

Highlights of Bidvest’s half-year results include:

  • HEPS up 13% to 1 001,5 cents (2014: 886,3 cents);
  • Most Foodservice businesses achieved real organic growth in local currency;
  • Improved trading result by Bidvest South Africa;
  • Turnover up 9,6% to R114,5-billion (2014: R104,4-billion);
  • Trading profit rises 11,6% to R5,2-billion (2014: R4,6-billion);
  • Strong contributions by Europe and UK;
  • Gross profit percentage rises to 20,5% (2014: 20,1%); and
  • Cash generated by operations up 6,5% to R6,4-billion (R6-billion).

Source: www.biznews.com

Packaging and paper group Mondi has announced an increase in full year pre-tax profit to €796-million from €619-million a year ago.

On a per share basis, earnings were 124 euro cents, up from 97.4 euro cents in the previous year. Underlying earnings for the full year was 133.7 euro cents per share.

Group revenue climbed 7% to €6,819-billion from €6,402-billion in the prior year.

In a separate release, Mondi group said it plans to sell interest in uncoated fine paper operations in Austria, Hausmening and Kematen known as Neusiedler to subsidiary Mondi SCP for €30-million. Remaining 49% of SCP is with Eco-invest. The transaction is expected to complete in March 2016.

David Hathorn, Mondi group chief executive says its outlook for the business remains positive. However, the company sees some softness in certain of its packaging paper grades and sees firmer prices in the European uncoated fine paper markets following recent industry capacity rationalisation.

Source: www.nasdaq.com

Bic reports successful 2015

Bic has announced that its full year 2015 stationery net sales increased 7,4% as reported and were up 3,6% on a comparative basis. Full-year 2015 volumes grew 2%.

Bic reports that its 2015 results were good thanks to the success of its “champion brand” strategy fueled by successful new product introductions, continued investments in brand support, and sustained investments in geographic expansion.

The Europe region recorded net sales up high-single digit, sustained by good results during back-to-school and market share gains in most countries. This performance reflected the success of core segments such as ball pens, colouring and correction and the “champion brand” strategy.

The North America zone generated net sales up low-single digit, reflecting the good execution of its strategy and the success of new products (such as the BIC Atlantis range and BIC X-tra fun graphite pencils).

This performance was supported by the positive impact of its “Fight for your write” campaign.

Developing markets saw net sales increase low-single digit with most of the regions delivering strong performances.

Source: www.office-times.com

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