Pepkor cuts dividend after Building Company writedown
Clothing and general merchandise business, which contributes almost two-thirds to group revenue, increased revenue 6.5% to R45bn
Pepkor, previously Steinhoff Africa Retail, trimmed its dividend for the year to end-September by almost a quarter on Monday due to a contraction in the building materials market.
Headline earnings per share jumped 16.7% to 98.3c, but basic earnings per share fell 22.5% to 64.6c, as a result of a R1.2bn impairment at the Building Company.
The company’s policy is of a dividend covered three times by earnings, with the 20.9c gross cash dividend representing a 24.8% fall from the prior comparative period.
The company’s clothing and general merchandise business fared better, increasing revenue 6.5% to R45bn. This segment contributes almost two-thirds to group revenue.
Revenue in the group’s fintech business, which includes Capfin and Flash, jumped 43.9% to R7.2bn. Virtual turnover growth at Flash, which services informal traders, exceeded 20%.
Group revenue grew 9% to R69.6bn, and operating profit 15.6% to R6.8bn.
The group — whose brands include Pep, Ackermans, Incredible Connection and Timbercity — was a wholly owned subsidiary of Steinhoff until it was listed on the JSE in September 2017.
During the period it opened 338 new stores, bringing its total footprint at the end of the period to 5,415.
Pepkor said on Monday it remains cautiously optimistic about the next year, and that its merchandise-buying programme will reflect this.
Trading conditions remained constrained due to high levels of unemployment and low levels of economic growth.
“The ongoing focus on the needs of our customers, discipline in leveraging off our strategic strengths and ability to operate at a low cost of doing business, again proved to be successful and shows the business’ resilience in difficult trading conditions,” said CEO Leon Lourens.
“While Pepkor remains cautiously optimistic about the South African retail environment, our teams continue to identify opportunities for growth and expansion such as leveraging our footprint, opening more new stores, fresh retail formats and innovative channels to serve customers,” he said.