Tag: earnings

By Sandile Mchunu for IOL

Mondi’s share price tumbled by more than 4percent on the JSE yesterday the global packaging and paper group reported that its underlying earnings before interest, tax, depreciation and amortisation (Ebitda) fell by more than 20percent for the third quarter to end September, despite the group saying it was well-positioned for when the economic recovery takes place.

The share later closed at R343.86.

The group reported underlying Ebitda of R306-million (R5.9-billion), down from 383m reported in the same quarter last year.

However, when compared to the second quarter to end June, underlying Ebitda was down by 13percent.

Mondi said good volume growth in uncoated fine paper and fibre-based packaging products and ongoing strong cost control were more than offset by the effect of planned maintenance shutdowns, negative currency effects and lower average selling prices during the quarter.

Mondi postponed most planned maintenance shut-downs to the second half of the year to protect its people from the Covid-19 outbreak and minimise execution risk.

However, it said planned maintenance shut-downs with an estimated impact on underlying Ebitda of around 35m were carried out during the quarter. “Based on prevailing market prices, we continue to estimate that the impact of planned mill maintenance shut-downs on underlying Ebitda for 2020 will be around 100m, with the fourth-quarter impact expected to be around 55m,” the group said.

Chief executive Andrew King said the decisive action they took in the early stages of the Covid-19 pandemic helped to protect their people, maintain supply of essential products and services and deliver a resilient performance. “I am pleased that sustainable packaging continues to be a focus for our customers. We continue to make good progress leveraging our award-winning innovation capabilities and customer-centric approach to optimising packaging design using ‘paper where possible, plastic when useful’,” King said.

The group’s major capital investment projects were progressing according to plan, with the 67m capital investment project to convert a containerboard machine at ttí in the Czech Republic to become fully dedicated to the production of speciality kraft paper for shopping bag applications was scheduled to be commissioned during the fourth quarter.

The group said this additional capacity of 75000 tons further supported its retail customers in their efforts to replace unnecessary plastic.

Mondi paid an interim dividend to shareholders of 237m during the quarter and said its financial position remained strong, with liquidity of around 970m.

Looking ahead the group said the macro-economic outlook continued to be uncertain, however, it was confident that it would continue to demonstrate its resilience while remaining well-positioned for when the recovery takes place.

 

Source: Supermarket & Retailer

Makro and Game owner Massmart says that its losses for the half year ending 29 June 2020 will be slightly lower than previously expected – but it still expects to take a significant hit.

In a sales statement published on Thursday (20 August), Massmart said it expects headline losses for the period to be between 31% and 41% lower than the same period last year.

While this is down significantly, it is a slight improvement from the over 50% decline projected in June. The slight boost has been attributed to lighter lockdown restrictions which came into effect during that month.

The group anticipates a R1 billion to R1.1 billion headline loss for the period, extended from a loss of R800 million recorded in 2019.

“June 2020 marked an improvement in sales in comparison to sales in prior months during the national level 5 and 4 Covid-19 lockdown periods,” the group said.

“Liquor, general merchandise and home improvement sales benefited from pent-up consumer demand, resulting in total sales for June increasing by 0.8% compared to the same period last year.”

However, this was still not enough to improve sales figures from last year. For the 26-week period ended 28 June 2020, Massmart’s total sales amounted to R39.6 billion, representing a decrease of 9.7% on the same period last year, with comparable store sales decreasing by the same level. Internal product inflation is estimated at 3.7%.

Total sales from South African stores for the 26-week period decreased by 10.6%, while comparable sales decreased by 10.5%.

“The Covid-19 national lockdown in South Africa had a significant impact on the trading performance of the Massmart Group. For the 9-week period from 30 March 2020 to 31 May 2020, total sales were R4.6 billion lower than the same period last year,” the group said.

Operating costs attributable to the execution of safety protocols in group stores – in accordance with regulated requirements – amounted to R62 million on a YTD basis, while the group added that other indirect costs related to the pandemic increased by R13 million.

Further, Massmart said its earnings are expected to be adversely affected by the impairment of the carrying value of some store level assets, as well as retrenchment costs relating to the announced closure of all of the Dion Wired and 11 Masscash stores.

A possible sale of the Masscash stores is also currently under review, it said. Mashcash includes: CBW, Jumbo Cash and Carry, Trident, Shield, Cambridge Food and the Rhino Group.

 

Will Walmart call it quits in SA?

According to a recent Business Day article, Massmart – who owns brands such as Game and Makro – is in trouble.

The company recorded a R550-million loss to June 2019, and investors have been told earnings will likely be less than 50% of what they were in 2018.

  • Walmart is the world’s largest bricks-and-mortar retailer. The company paid $2.3bn to buy 52% of Massmart in 2011
  • Walmart paid R148 a share, but today share prices stand at R44 – a 70% drop in value
  • Speculation is rife that Walmart may pull out of SA rather than buy the other 48% of Massmart
  • SA won’t be the first country Walmart has exited. It also gave up on Germany, Britain and South Korea, and is currently scaling back in Brazil
  • In 2010, Massmart generated cash of R2.6bn and paid dividends of R822.4m
  • By 2018, cash flow was at R2.8bn, and dividends marginally lower at R750m
  • Massbuild (primarily Builders’ Warehouse) would be an easy sell but it would be a struggle to find buyers for Massdiscounters (Game and DionWired) – stores that have been hard-hit by online competition
  • Other businesses in the stable are Masswarehouse (Makro and The Fruitspot) and Masscash, whose brands include Jumbo Cash & Carry and Cambridge Food
  • By 2020 it will be clear whether or not Walmart can extract value from its African conglomeration, or whether it breaks it into its pre-1990s components and sells them off.

Massmart confident it can turn Game around

Source: CNBC Africa

Massmart had a tough financial year, reporting a decline in headline earnings per share by 31.7 cents.

The biggest contributor to the company’s decline were Game, Dionwired and Hi-Tech.

Investors have been surprised by the extent of the decline.

According to Massmart CEO, Guy Hayward, the company’s sales are an accurate depiction of the general state of the South African economy.

“We are also disappointed in our profit growth, which is down 16%,” he says.

Food and Game are already 22% of total sales, and 2018 saw a move to Johannesburg and the restructuring of management and support roles.

“We are confident that we are doing the right things and that customers will respond to us in 2019,” Hayward says.

Turning Game around

Game will be kept very relevant to customers. The R20-billion business has up to 40% market share in many places; in fact, the company sees one in three TVs sold through it.
Going forward, Game will need to drive down costs and manage selling prices better.
“We need to make sure we offer customers wonderful merchandise that is very well priced. We need to shout about it; we need to make sure they know what they can buy in Game. We need to offer exciting products – maybe exclusive deals we have that no one else has, and we need to make sure our food is very well priced,” Hayward concludes.

 

Bidvest on Monday reported a better set of first-half results, leveraging off the diverse nature of its portfolio.
Easily one of the better proxies of the local economy, its portfolio spans services, freight, automotive, office and print, commercial products, financial services and electrical companies.

Trading profit rose 12% to R3.1bn in the six months to end-December, as revenue rose 10.7% to R39.9bn.
The services, freight, and office and print divisions were the standout performers, with increases in trading profit of 24.3%, 18% and 12.7%, respectively. The automotive division disappointed though, with trading profit down 6%.

Bidvest SA also counted on the acquisition of facility management services group Noonan, as well as the additional three-month contribution from Brandcorp.

The share of profits from associated companies, before capital items, was up 26.4%.

Bidvest holds investments in pharmaceuticals group Adcock Ingram (38.5%), airline operator Comair (27.2%), Mumbai Airport (6.75) and a 52% interest in Bidvest Namibia.

But trading profit in Bidvest Namibia slumped 68% as a result of what the group said was sluggish economic growth
in that market, and fishing industry and operational challenges.

All in all, group headline earnings per share (HEPS) rose 12.5% to R5.74 and interim dividend per share 12.3% to R2.55.

By Andries Mahlangu for Business Day

SABC posts massive R977-million loss

The South African Broadcasting Corporation posted a R977m loss after tax for the 2016/17 financial year, its annual report tabled in Parliament on Tuesday revealed.

The public broadcaster’s net loss for the year ending March 2017 more than doubled from R412m in 2016, following a year of upheaval that included the dissolution of the permanent board in late 2016.

Revenue declined from R8.1bn in 2016 to R7.6bn, representing a 6% year-on-year decrease.

Advertising also dropped 5% to R5.6bn, in a year that saw former chief operating officer Hlaudi Motosoeneng implement the 90:10 local content policy in May.

Sponsorship revenue declined by 18% to R384m, while TV license revenue decreased 7% to R915m.

Operational expenses remained the same at R8.6bn.

The report also said that the SABC had a cash balance of R82m, representing a net outflow of R800m since the previous year.

“The fact that operational cash was used to fund capital expenditure projects, the cost of delivering on broadcaster’s public service mandate and the rising cost of Sports Rights contribute to the pressure being placed on the organisation’s cash reserves,” the report reads.

Turnaround

An interim board was appointed by President Jacob Zuma on March 26, 2017, following a lengthy inquiry process into the broadcaster and Parliament’s approval of 5 names to serve in the interim.

The new board, led by interim chairperson Khanyisile Kweyama, made inroads into turning the beleaguered broadcaster around, and has been praised by both the portfolio committee on communications and standing committee on public accounts.

The interim board’s mandate expires this week. The National Assembly approved a list of 12 names for non-executive board positions on September 5, which only await President Zuma’s approval.

They include all five interim board members.

The 12 are: Michael Markovitz, Khanyisile Kweyama, Mathatha Tsedu, Nomvuyiso Batyi, Rachel Kalidass, Victor Rambau, John Matisonn, Jack Phalane, Krish Naidoo, Febe Potgieter-Gqubule, Dinkanyane Mohuba and Bonbumusa Makhathini.

Source: MyBroadband

South Africa’s tough retail environment ate into Mr Price earnings over the past year, as consumers kept a firm hold on their wallets due to the current economic climate.

The group on Tuesday reported a decrease of 10.4% in its diluted headline earnings for the year to 1 April 2017 compared to the previous year.

Mr Price’s poor year corresponded with competitors Truworths, Woolworths and Foschini’s weak sales numbers, highlighting the struggles of the sector.

“This was the group’s first earnings decrease in 16 years during a very difficult trading period,” said CEO Stuart Bird.

Total revenue rose 0.7% to R19.8bn, with retail sales decreasing 0.5% to R18.6bn.

The results were not unexpected, as the Durban-based retailer’s pre-Christmas performance had been dismal. Mr Price attributed the losses at the time due to last year’s unseasonably warm winter as well as promotional markdowns by competitors to clear stock. Foreign retailers such as H&M and Cotton On also ate into the retailer’s market share.

Despite its retail woes Mr Price remained cash generative, providing a good return on average equity to shareholders. Free cash flow increased 131% to R1.8bn and cash resources at period end were R1.8bn. The annual dividend per share stayed at 667c, with the final dividend of 438.8c per share up 4.7%.

Annual dividends of the group have not declined in the last 31 years.

The group said its cash-based business model has enabled it to maintain its dividend track record. It also used the model to fund capital expenditure of R2bn in the last two years to build the necessary infrastructure to support growth plans.

The no-frills retailer said the year proved to be exceptionally challenging for the retail sector.

“Consumer confidence remained low as a result of the poor state of the local economy and a lack of faith in the current political leadership’s ability to set high standards of governance and deliver inclusive growth.”

It also blamed the Cabinet reshuffle and credit ratings downgrades for causing exchange rate volatility, which led to higher prices the consumer ultimately had to absorb.

“As a result, the retail environment has become more competitive, with any growth in a stagnant market coming from increased market share,” Mr Price said.

“This has led to retailers in our sector increasing their promotional activity to drive sales and manage stock levels.”

The merchandise gross profit margin decreased by 1.3% to 40.6%, mainly due to higher markdowns in MRP Apparel, the group’s largest chain. The apparel division, which accounts for around 70% of group sales, has struggled to attract sales.

However Mr Price’s sales growth in the fourth quarter improved, buoyed by sales in the Easter school holidays. Local online sales also continued to perform well and were 13.0% higher than last year.

MRP Sport increased its sales by 7.7% to R1.4bn, performing strongly in the first half with sales gaining 13.3%.

Mr Price singled out MRP Apparel and Miladys as its underperforming units, but added that the new financial year presented new hope, with the best sales performances coming from these two units.

MRP Apparel’s performance, with a decline in operating profits, was an especial cause for concern with sales of R10.9bn 1.7% lower. In the first quarter its product offerings did not resonate with customers, Mr Price said.

Miladys sales of R1.3bn were 5.3% lower. Operating profit increased in the second half, but fell on an annual basis despite a higher gross profit percentage and good cost control.

Although there was limited overhead growth below the inflation rate, it was not sufficient to counter the decline in sales and gross profit.

The retailer said any improvement in the consumer environment is likely to be gradual. Its recovery plans centres on regaining its lost market share, which it believes is the most significant near-term opportunity.

Mr Price’s share price jumped 5.28% to R153.91 at 11:20 on the JSE.

By Yolandi Groenewald for Fin24

Follow us on social media: 

               

View our magazine archives: 

                       


My Office News Ⓒ 2017 - Designed by A Collective


SUBSCRIBE TO OUR NEWSLETTER
Top