Investor Relations
Welcome to the Pick n Pay Group
Investor Relations
Welcome to the Pick n Pay Group
HIGHLIGHTS
Cape Town: Pick n Pay today published its annual financial results for the year ending 25 February 2018.
Headline earnings per share grew 7.1%, with diluted HEPS up 7.7%. Trading profit was up 4.9%, with the trading profit margin unchanged at 2.2%.
In the first half of the year Pick n Pay implemented a voluntary severance programme (VSP) which improved efficiency and productivity, but had a once-off cost of R250m in severance payments. Excluding these VSP payments, trading profit for the year was up 19.3%, with trading profit margin improving from 2.2% to 2.5%.
Through the VSP and other actions, the Group has built a leaner, fitter operating model, with more headroom to give customers lower prices and better promotions. The benefits were evident in an exceptional Q4 trading performance, with the Group’s South African segment delivering sales growth of 8.0% (LFL 5.3%). This was well ahead of the market and was achieved against internal selling price inflation of 0.2%, with positive volume growth of 5.1%.
Turnover growth for the year as a whole was 5.3%, delivered in a challenging trading environment, with some disruption from the VSP in the first half of the year. Overall selling price inflation was 2.2%, well below the 6.1% in the previous year.
Commenting on the result, CEO Richard Brasher said:
“I want to thank everyone at Pick n Pay for their contribution to a very important and successful year. I am very pleased with what we achieved.
“In the first six months, we acted boldly and decisively to reduce our costs and increase our productivity through the VSP and other programmes. By doing so we built a leaner, fitter and stronger Pick n Pay, and gave ourselves the headroom to reduce our prices from the second half of the year.
“This was the right strategy, and its success was evident in our final quarter, when we delivered a notable increase in sales and market share. Our South African business delivered sales growth of 8.0% in the last three months of our financial year, with like-for-like growth of 5.3%. This was achieved at a time when internal selling price inflation had fallen to just 0.2%, demonstrating strong underlying volume growth.
“Evidence that we have built a leaner, fitter and stronger Group is demonstrated by the fact that, excluding the VSP payments, trading profit for the year was up 19.3%, with the trading profit margin improving from 2.2% to 2.5%.
“I am also delighted with the performance of our Boxer business. The Boxer team have accelerated their turnover growth in a highly competitive market, and Boxer is now without doubt South Africa’s leading limited range discount supermarket.
“While the cost of the VSP impacted our profit this year, these costs will not recur. In contrast, the benefits of our structural changes and increased momentum will be carried into the 2019 financial year and beyond.
“We are changing the trajectory of Pick n Pay. Over the next year we will continue to invest in our prices, our promotions and our customer offer. Through Pick n Pay and Boxer, we will win customers across all levels of our economy.
“By growing as a Group, our positive impact grows. Our new President has called on business to help build the economy and get more South Africans into sustainable jobs. Over the past three years, we have invested R5.3 billion in opening and refurbishing stores and building our supply chain. This enabled us to create 13,700 new jobs. During the next three years, we will create another 15,000 new jobs, bringing many young people into the world of work and the opportunities that retail provides to build a career and progress in the world.”
Other progress made over the year included:
Rest of Africa
The Group’s Rest of Africa operations contributed R4.6 billion of segmental revenue this year, up 7.7% on last year (9.3% in constant currency terms), notwithstanding difficult trading conditions in some regions. TM Supermarkets performed particularly well, delivering strong profit growth, with Pick n Pay’s share of TM’s profits up 45% year-on-year, or 58.5% growth in local currency. In Zambia, stronger operational efficiency and tight cost control tempered the impact of the tough trading environment on sales growth.