Shoprite profit jumps 15.5% in half-year

Retailer Shoprite, which scrapped plans to merge with Steinhoff International on Monday, reported a 15.5% jump in half-year profit, buoyed by sharp sales growth in Angola and Nigeria.

Shoprite has grown rapidly outside its home market, with sales in other African countries now accounting for more than a fifth of its total.

A merger with Steinhoff International would have created an African retail giant, but the plan was called off after minority shareholders said the deal would offer little value to Shoprite.

Some analysts said there were no obvious synergies between the two businesses.

Shoprite reported diluted headline earnings of 460c/share for the six months to end-December, in line with forecasts, compared with 398.2c/ share a year earlier.

Sales in Angola surged 155% from a year ago, while Nigerian revenue jumped 60%. Both are important growth markets for the retailer, but experienced a shortage of foreign exchange as oil revenues remained under pressure, affecting economic growth.

However, Shoprite said it was able to fund its stock requirements from its external balance sheet and kept shelves stocked while many traders in the region struggled.

Chief executive Pieter Engelbrecht said: “It was exceptional growth and we must be cautious because to continue at 150% is unlikely.”

He took over from Whitey Basson last month.

In South Africa, sales grew 14% to R71.3-billion, while sales outside its home market advanced 32.2% to R12.9-billion.

Shares in Shoprite jumped more than 8% on Monday after the merger was called off.

Shoprite shares were up a further 0.9% after the results yesterday.

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