SPAR delivers knockout performance


SPAR delivers knockout performance

Published Date: 2020-11-19 | Source: Stephen Gunnion | Author: Stephen Gunnion

SPAR delivers knockout performance

Despite losses at its Polish business after Covid-19 disrupted progress in the new market, the group has grown earnings and raised its dividend.

SPAR Group has reported a solid rise in full-year earnings and has increased its dividend despite expected losses from its fledgling Polish business. It's shares rallied as much as 13.5%.

The group, which is a wholesaler and distributor of goods to its franchised retail outlets, described its performance as 'extraordinary' as Covid-19 lockdown resulted in increased home consumption, driving higher-margin grocery and fresh categories of food.

SPAR Southern Africa contributed growth in wholesale turnover of 5.8% to R78.6 billion for the year ended September, with its core food business increasing sales by 9.2% due to strong demand for groceries. However, its TOPS at SPAR liquor business lost almost a third of its total trading days due to the restrictions on the sale of alcohol during the lockdown. Build it managed to curtail a decline in wholesale turnover to 0.9% despite trading restrictions on building materials in an already weak sector.

In Ireland, sales growth across all the retail brands of The BWG Group more than compensated for the impact of restrictions in the hospitality industry on its Cash & Carry and BWG Foodservice businesses. Its EUROSPAR format stores grew sales by 11.5% in local currency.

SPAR Switzerland also benefited from changing consumer behaviour, influenced by the closure of Swiss borders during the initial lockdown. It grew turnover by 11.6% in local currency as locals shopped closer to home and opted for community-based stores over large supermarkets.

The Covid-19 pandemic disrupted SPAR's plans and delayed progress in Poland, where it bought supermarket chain Piotr i Pawel a year ago. However, while it reported an operating loss, the region contributed R2.1 billion towards group turnover for the period.

In total, group turnover rose 13.5% to R124 billion and operating profit jumped 15.6% to R3.44 billion. Earnings per share (EPS) fell 4% to 1,078.8c and headline EPS came in 0.5% up at 1,135,3c. Normalised diluted HEPS rose 8.8% to 1,262.6c and it raised its dividend by 8.1% to 865c per share.

With a second wave of infections and hard lockdown measures across much of Europe, SPAR said it businesses had contingency plans in place to deal with the disruptions. It said its Irish operations faced continued uncertainty as the gradual reopening of the economy was likely to coincide with the impact of Brexit. It was focused on breaking even in Poland by the end of its 2021 financial year.

SPAR's shares closed 13% higher at R205.21.

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