Shares of JSE-listed grocery chain Spar slumped on Wednesday, after it reported muted operating profit growth for its year to end-September, hit by surging costs including for fuel and promotions, while its full-year dividend has more than halved.
The firm said on Tuesday group operating profit rose 1.1% to R3.43 billion, dipping in its core SA business, while a temporary change in dividend policies to fund the rollout of a new enterprise software system helped prompt a fall in its full-year dividend to 400c, from 816c previously.
In morning trade Spar’s shares had slumped 9.75% to R148.91, earlier falling 11%, and now having lost almost a quarter over the past year.
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However, the company, which has operations in SA, Ireland, England, Switzerland and Poland, said it “delivered a resilient group performance despite various challenges across all regions”, adding that group turnover increased 6% to R135.6 billion.
It said that in constant currency, turnover increased by 7%.
“Group profitability continued to be impacted by the consequences of the pandemic in the first half of this financial year and new geopolitical circumstances which has seen all regions experiencing fuel and energy cost pressures,” said the company.
Referring specifically to southern Africa, the group said that these pressures were “further exacerbated” by the effect of load shedding. This region, almost two thirds of group turnover, saw its operating profit dip 1.4% to R2.45 billion, with operating expenses rising 11.7% to R6.9 billion, with computer costs jumping 38.3% ahead of the implementation of its new system, advertising and promotional costs increasing 20.2%. Fuel and transport costs surged by 26.2%.
SOURCE: News 24
