Cashbuild performs well in tough environment

Cashbuild CEO Werner de Jager.
Cashbuild CEO Werner de Jager.
Johannesburg - Cashbuild [JSE:CSB], southern Africa’s largest retailer of building materials and associated products, posted a 7% increase in gross profit for the half-year to December 2013.

Revenue for the period increased by 7%, with price inflation contributing 4%. The gross margin percentage remained at 22.9% “despite a the competitive environment”, the company said.

Operating profit decreased by 3% largely due to operating expenses increasing by 10%. Basic earnings per share decreased by 7% and headline earnings per share decreased by 8%.

Net asset value per share increased by 13%, from 4 233c (December 2012) to 4 799c.

“It’s been a tough year, we’ve been struggling on the top line,” Cashbuild’s CEO Werner de Jager told Fin24 in a video interview.

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“As regards prospects for the rest of the financial year, we remain cautious about the trading environment. Despite the first six weeks trading since period-end having increased by 10% on the prior comparative period, we remain cautious about trading prospects for the remainder of the financial year. The economy’s still tough, consumers are still under pressure and we’re not expecting major growth on the top line. We think the rest of the financial year will still be tough.”

When asked if he isn’t perhaps being overly conservative, De Jager said he would rather “surprise on the upside than the downside”.

“In the meantime we continuing investing in our stores,” he said.

“We’ve expanded, we’ve opened seven new stores and we hope to open another seven by the end of the financial year.” That will bring the total number of stores to 214.
 
The Group refurbished thirteen stores and relocated four stores in the reporting period and intends to continue its current store expansion, relocation and refurbishment strategy.
 
Cash and cash equivalents increased by 53% to R788m in the reporting period (2012: R528m).

“But that might be slightly misleading,” said De Jager, “it sometimes happens that our creditors are paid before the cut-off date and at other times they are paid after the cut-off date. In this half-year there was a payment to creditors of R500m directly after the cut-off period, which was not the case in the previous comparative period.”

Cashbuild declared an interim dividend of 275c a share (2012: 296c).


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