Cashbuild under pressure

Cashbuild, one of southern Africa’s largest retailers of building materials and associated products, reported weak results for its 2024 financial year, as the company’s profit margins came under pressure.

Cashbuild released its results for the 53 weeks through June 2024, which revealed a significant decline in earnings.

While revenue was up around 5% to R11.2 billion, Cashbuild’s cost of sales grew by almost 6%, which put pressure on the company’s margins.

This saw its profit for the year decreased by 23.78% to R87.58 million, down from R114.90 million the year prior.

Cashbuild’s basic earnings per share declined by 13% to 396 cents per share, while headline earnings per share declined by 22% to 947 cents.

This comes as many retailers in South Africa are struggling to operate in the country’s high inflation, low growth, high interest and high cost-of-living environment.

This environment has put South African consumers under significant pressure, reducing spending and demand for non-necessities.

It also makes it more expensive for retailers to operate, especially if they cannot pass their increased costs on to consumers.

“The 53-week year ended 30 June 2024 reflected the same economic and trading challenges as the previous year for most of the financial year under review,” Cashbuild said. 

Aside from the difficult trading environment, Cashbuild also took impairments of R136.7 million in the 2024 financial year.

At its financial year-end, Cashbuild was trading from 322 stores. During the year, the company opened 6 new stores, refurbished 20 stores, relocated 1 store and closed 2 stores. 

Operating profit decreased by 19% to R189 million and, excluding the impairments, decreased by 16%. Its operating profit margin reduced to 1.7%.

Cashbuild also reported a significant cash and cash equivalents reduction of 37% to R999 million.

It said this was mainly due to the June 2024 suppliers’ payments being processed within the reporting period, in contrast to the prior year, where the supplier payments were processed subsequent to the reporting period’s end.

“We are more optimistic about the outlook for the next financial year as we believe that the GNU, and to a lesser extent the Two-Pot system, will stimulate economic growth and the much-needed infrastructure programmes will find traction during the 2025 calendar year,” said CEO Werner de Jager. 

“In addition, the outlook is that interest rates will reduce towards the latter part of the 2024 calendar year and will alleviate some of the consumer spending pressure.” 

Cashbuild’s board declared a final dividend of 236 cents, bringing the total dividend for the year to 561 cents per share.