Spar lifts dividend after ‘strong’ interim performance
Spar Group has hiked its half-year payout to shareholders by 5.2% on the back of “a strong performance” in the six months to end-March.
The retailer, which operates in Southern Africa, Ireland and Switzerland, said on Wednesday that interim profit after tax fell 2.7% to R1bn largely because finance costs rose on foreign exchange movements.
When stripping out those costs, normalised headline earnings per share increased by 7.5%, “which is more reflective of the group’s performance”, Spar said.
Total turnover grew 8.6% to R54.3bn, despite “tough trading markets across all business geographies”.
Spar Southern Africa contributed growth in wholesale turnover of 7.7%, with food price inflation rising to 1.9%.
“The Tops liquor brand again delivered excellent results with wholesale sales growth of 19.3%,” Spar said. The building materials business, Build it, grew wholesale turnover by 8.3%.
The store network in the region grew to 2,308 from 2,236 stores.
Spar’s Irish business “delivered solid euro-denominated results, with all retail brands continuing to report good turnover growth”. That unit benefited from the acquisitions of the 4 Aces wholesale business and Corrib Foods.
Meanwhile, “despite making real progress in addressing strategic issues”, Spar Switzerland missed profitability expectations amid an “aggressive marketing campaign”.
Spar, which is headed by Graham O’Connor, said trading conditions in Southern Africa are likely to remain “extremely competitive in the medium term”.
“Indications are that food prices will increase, while most measures continue to suggest that consumer spending will remain under pressure,” the group said.
Elsewhere, the threat of Brexit to the Irish economy “has temporarily diminished, but the shadow of uncertainty still lingers”.
“Management remains positively cautious in its outlook for the remainder of the year and believes that adequate plans are in place to respond to any market changes, thereby ensuring that Spar Ireland will again deliver results in line with expectation.”
In Switzerland, “a far stronger second half result is expected”.
Spar’s first-half dividend rose to 284c a share from 270c previously.
The group also said it is in the final stages of talks to buy a controlling stake in Polish deli and supermarket chain Piotr i Paweł group, as part of its efforts to expand in Europe.
A deal with Piotr i Paweł — which operates 77 delicatessen and supermarket stores plus a wholesale distribution network — would expand its presence to Poland, which is enjoying a period of robust economic growth and record low unemployment.
Spar said it had been awarded a licence to operate its brand in Poland. It did not give details on the value of the deal, which is subject to regulatory approval.
Spar’s shares were 2.2% lower at R193.48 in early trade.