By Nqobile Dludla
JOHANNESBURG (Reuters) -South Africa’s SPAR Group Ltd reported on Wednesday a 3% fall in full-year earnings after a rise in expenses, sending its shares down 13% as investors also fretted over the low dividend payout and weak local sales.
The grocery retailer’s shares hit a one-month low, putting them on track for the biggest one-day loss on record.
SPAR, which also operates in Poland, Switzerland and parts of the United Kingdom, said headline earnings per share (HEPS), the main profit measure in South Africa, fell to 1,160.5 cents in the year to Sept. 30, from 1,196.2 cents a year earlier.
Operating profit inched 1.1% higher to 3.4 billion rand ($196.91 million), reflecting the decline in profitability in Southern Africa and a rise in operating expenses of 8.5% at group level.
SPAR blamed increases in fuel and energy costs in all its operating regions for the expense growth, with those costs rising by 26.2%, while others such as promotional and IT costs also grew.
Group Chief Executive Officer Brett Botten told Reuters SPAR would increase the installation of renewable energy for its franchise retailers and also cut the number of one-way truck loads that return without stock and therefore waste fuel.
SPAR managed to increase group turnover by 6% to 135.6 billion rand, driven by promotions in Southern Africa to attract cash-strapped consumers.
But some investors were not convinced by the sales numbers.
“The South Africa business is under pressure. Strip out the liquor business numbers, and they look like the weakest link,” said Casparus Treurnicht a portfolio manager at Gryphon Asset Management.
He added the dividend had been “quite a shock” and he had expected a level of around 350 cents.
SPAR declared a final dividend of 225 cents per share, down 58% from last year.
Sasfin Wealth senior equity analyst Alec Abraham also said the lower dividend was bad news, although it was wise given the higher expenses.
($1 = 17.2669 rand)
(Reporting by Nqobile Dludla; Editing by Christopher Cushing, Rashmi Aich and Barbara Lewis)
