Cashbuild, which posted weaker results as the pandemic home improvement boom ended, is expecting continued hardship for consumers who it says are under extreme pressure.
The group recorded 12% lower revenue at R11bn in its year to end-June, a decrease from its 2021 financial year and best-yet performance as people invested in their houses while working and socialising at home.
The group said it had not expected to repeat the previous year’s results in which revenue increased 25%.
All other building suppliers, including Pepkor’s Building Company, Builders and PPC, saw sales starting to slow in 2021.
Operating profit of the company, which listed on the JSE in 1986, fell 16% to R876m. Profit after tax was down 28% to R478m from R670m.
But CEO Werner de Jager said it was the company’s second-best year yet. “On a stand-alone basis, it’s our second-best results yet in our history, and our operating margin is strong.”
Cashbuild is planning to open five stores in the year ahead and possibly close a damaged store.
The group is predicting a tough trading environment “due to subdued prospects”, in SA and globally.
“Unstable market conditions and inflationary pressures are a reality, affecting the affordability of products and placing pressure on sales growth.”
Cement comprises about a quarter of its sales, some of which is to the informal market, which appears to be struggling as much as the formal economy, De Jager said.
Low-end consumers, to whom it sells the P&L brand, are hardest hit by increased fuel and energy prices.
The company declared a dividend of 677c, down from 2,211c a year ago.
The group increased its dividend cover policy, but cut the dividend by two-thirds after a bumper dividend in the prior year. It had set aside cash to buy Pepkor’s Building Company. When the deal was blocked by competition authorities it paid “all that cash out to shareholders”.
The dividend cover policy of the company has been improved from the previous two times to 1.5 times.
De Jager said the company increased the dividend as it is not planning big acquisitions, and so “we had a good look and said we can sustain the business with a better dividend payout ratio”.
Cashbuild’s SA operations generated the most revenue with more than four-fifths, followed by P&L Hardware operations with 8.23%.
Cashbuild was hit by the unrest in Gauteng and KwaZulu-Natal in July 2021, during which 36 of its stores were looted and damaged. Of the looted stores, 28 have since reopened.
The company now has 318 stores after opening four stores, refurbishing 21, moving one, rebuilding 28 looted branches and closing five stores during 2022. Two of the stores were closed because they were not performing and the others because of looting.
Selling price inflation was 7.2% compared to June 2021, partly because of the higher inflation caused by the war in Ukraine that has pushed up food and fuel prices.
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