25 Feb Interim Results For The Year Ended 30 December 2018
Securities Exchange Notices | Shoprite Holdings Limited | Interim Results For The Year Ended 30 December 2018
– Sale of merchandise increased by 0.2% to R75.8 billion.
– Trading profit decreased by 19.0% to R3.3 billion.
– EBITDA decreased by 12.2% to R4.7 billion.
– Diluted headline earnings per share of 398.5 cents, down by 24.1%.
– Dividend per share of 156 cents declared (2017: 205 cents).
– Opened a net 86 corporate stores during the 12 months (2017: 121).
– Created 1 758 additional jobs during the six months.
Pieter Engelbrecht, chief executive officer:
2018 has been a transformational year for the Group, which remains Africa’s largest and most profitable retailer. Our first
half performance is below expectations, but not a reflection of the fundamental strength of the business. The results for
the six months were affected by an overlapping of multiple factors disrupting the trading environment.
These include factors in our external operating environment, where economic conditions have left our core customer
under significant financial pressure and in which significant currency devaluations severely impacted the performance
in the Non-RSA operations.
At the same time, we have dealt with many internal challenges, investment expenses and operational issues relating to
the implementation of strategic decisions including the roll out of the new SAP ERP system. The IT replatforming was
an absolute imperative and represents the culmination of four years of planning, and it will ultimately improve our global
In addition to a weak economy, 2018 saw a convergence of four main disruptive factors:
– The dramatic devaluation in the Angola kwanza by 85.1% against the dollar since January 2018.
– The supply chain disruption caused by the Centurion Distribution Centre (DC) industrial action in May and June which
lasted longer than anticipated.
– Supply issues coincided with more than half of the business going live on the IT system in the six months and
adversely impacted product availability for customers.
– RSA internal inflation remains low at only 0.4% marking the longest period of stagnant inflation in a decade. In
December customers still benefitted from 10 719 items in selling price deflation.
Other environmental issues also affected demand from price-sensitive customers, namely: the listeriosis crisis affecting
processed meat sales, SA’s first VAT hike in 25 years and the new Sugar Tax.
Product availability has improved but a lot of work still needs to be done and remains our number one priority in the short
term. We have continued to invest in the business through the cycle in new store rollouts and the digital transformation
of the Group.
Despite the tougher set of results, we served a record number of customers and sold record product volumes, up 1.7%
and 0.2% respectively, whilst supermarket space growth was 1.9%. Strategic decisions to invest in convenience foods,
our fresh offer, private label and our liquor footprint also continue to bear fruit.
The positive sales trend emerging in the festive season has continued in January and February alongside improving
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