More people bought building materials from Cashbuild this year than last, and the company kept a bigger slice of every rand they spent. Its operating profit still went backwards.
Revenue rose 6% to R12.1 billion, and the growth is real rather than inflationary: transactions through the tills rose 5% while selling prices moved only 1.5%.
Costs are where it went. Gross margin improved, from 24.8 cents kept out of every rand of sales to 25.3. Operating expenses rose faster than sales, though, and operating profit fell 15% to R292 million.
The Malawi exit that cost R34.9 million
Part of the gap has a name. Cashbuild sold its Malawi subsidiary and its two stores during the year and booked a R34.9 million loss on the way out. That is why the two earnings measures diverge: basic earnings per share fell 25%, while the cleaner headline measure fell 8%.
Why the new shops keep getting smaller
The expansion plan has run into property. Cashbuild ended the year with 317 stores and wants to open about 15 more in the coming one. Chief executive Werner de Jager says the traditional format depends on shopping-centre developers, and there are not many suitable developments going up.
So the format is changing instead. Of the nine stores Cashbuild opened this year, two were traditional stores and the rest were smaller or alternative formats, and the company says converting stores to its small model format remains on track. More than 40 stores are approved over the next three years, though de Jager does not expect all of them to happen.
The store estate churned underneath all of that. Cashbuild picked up three Amper Alles stores during the year and closed eleven underperformers, on top of the nine it opened.
Some of the growth came off the shelf rather than out of a new site. Paint mixing and tinting has been added at about 60 outlets, which de Jager says lifted the category.
The payout held its ground. The final dividend was cut 22% to 233 cents, leaving the total for the year unchanged at 626 cents. Since year-end there has been nothing to lean on: revenue in the first seven weeks of the new financial year is level with the same stretch last year.
