Trading Day – Pick n Pay expects massive loss while Life bemoans NHI

Pick n Pay expects a net loss between R3.14 billion and R3.38 billion for the 2023/2024 financial year. While the group’s revenue increased for the year, its financial results were severely impacted by a R2.8 billion impairment. 

Spear REIT reported a 6.2% increase in property revenue to R615 million. The group also saw a 99.1% increase in net profit from the 2023 financial year, following fair value adjustments.

Life Healthcare’s net profit dropped to R553 million, down from a R1.8 billion profit in the previous period. This drop follows the company’s disposal of AMG, which was concluded on 31 January.

The group saw increases in other avenues, including revenue and NeuraCeq doses sold. 

Rhodes Food Group’s headline earnings increased by 20.7%. The group’s interim financial results also showed growth in revenue from the previous period, although Rhodes is cautious about how inflation will affect consumer spending for the rest of the year.

Here is the biggest news of the day.

• Pick n Pay expects a net loss between R3.14 billion and R3.38 billion for the period. The group released a trading statement for the 52-week period that ended 25 February 2024. The group’s revenue increased by 5.4%, with only a 2.9% like-for-like increase. The South African retailer operates three brands – Pick n Pay, Boxer and TM Supermarkets. Boxer increased its revenue by 17.5%, while PnP store revenue fell by 0.2%. Group earnings have been impacted by a R2.8 billion non-cash asset impairment of Pick n Pay Supermarkets stores. This impairment has two components: R1.8 billion impairment of assets of selected loss-making company-owned Pick n Pay stores, which will be closed or converted to Pick n Pay franchises or Boxer stores, and R1.0 billion impairment of the assets of underperforming company-owned stores that will remain open.

• Spear REIT reported an increase in its property revenue of 6.2% from R580 million to R615 million. The group, listed as a Real Estate Investment Trust (“REIT”), invests in property across all sectors in the Western Cape, specifically in Cape Town. Spear released its results for the year that ended 29 February 2024. The group saw an increase in net profit of 99.1% to R362.7 million (net profit of 161.57 cents per share). This was mainly due to a R177 million fair value adjustment in its property portfolio. Spear generated distributable income per share of 82.99 cents per share, a 1.04% improvement. The group declared a final 78.86 cents per share dividend for the year, 3.8% higher than FY2023.

• Life Healthcare’s revenue increased by 7.8% to R11.74 billion. The second largest private hospital operator in South Africa, formerly Afrox Healthcare, reported its results for the six-month period that ended 31 March 2024. Revenue from continuing operations was 7.8% higher at R11.7 billion, driven by robust growth in paid patient days in southern Africa and strong growth in NeuraCeq doses sold. This resulted in profit after tax from continuing operations increasing to R735 million. The group concluded the disposal of Allied Medical Group (AMG) at the end of January 2024. AMG has been reported as a discontinued operation and is not included in the results of the continuing operations for the first half of the financial year. Life received R10.2 billion in net cash proceeds from the disposal after the settlement of all offshore debt and transaction costs. A special dividend of R8.8 billion was paid on 8 April 2024 from these proceeds.

• Rhodes Food Group’s headline earnings increased by 20.7% to R261.7 million. The internationally recognised food producer is home to brands such as Rhodes Quality, Squish, and Bull Brand. The group reported its results for the six-month period that ended 31 March 2024. Revenue increased by 3.2% to R3.9 billion. The company said that it expects consumer spending to remain under pressure for the remainder of the financial year due to continued inflation. The group “will drive sales and brand share growth through a heightened focus on product innovation, particularly in the fruit juice and dry foods categories”. 

It remains to be seen how these events will affect these companies and shareholders in the long term.