ANZ gives Steinhoff a Fantastic rise

fantasticfurnitureSouth African retail giant, Steinhoff International, has posted a 13 per cent increase in half-year operating profit and a 48 per cent rise in revenue driven mostly by sales from its recent acquisitions.

Steinhoff, which had been actively shopping for further retail opportunities in Australia last year and bought Fantastic Furniture, announced its operating profit increased to €903 million in the six months ending March 31 compared to the previous corresponding period which had €797 million.

Australia and New Zealand represents six per cent of the retail giant’s revenue.

Revenue in the company’s Australasian operations increased 64 per cent to €261 million, which includes €92 million from the Fantastic Furniture business.

Fantastic reported currency growth of three per cent, a four per cent rise in like-for-like sales and margin performance of 8.7 per cent, which the company said “clearly illustrated the resilience of the value price segment where Fantastic operates.”

Markus Jooste, Steinhoff CEO, said in their second year since listing on the Frankfurt Stock Exchange, the retail giant has been focused on the implementation and bedding down of recent strategic acquisitions, while the organic performance of the business remained solid.

“For the six months ended 31 March 2017, the Steinhoff group delivered a solid set of results supported by a resilient discount market as well as strong leadership and execution from our decentralised management teams,” Jooste said.

Jooste said amid volatile markets and currencies, organic revenue (excluding acquisitions) of the retail businesses (excluding supply chain) increased by nine per cent, translating to five per cent growth when measured in constant currency. Encouragingly, organic operating profit (excluding acquisitions) increased by 15 per cent in the retail businesses, improving margin of the organic retail business.

The group’s diluted sustainable earnings per share saw a six per cent decrease to 15.50 euro cents after the firm issued shares to finance the acquisitions, so issued shares rose 15 percent.

“From an equity perspective, the diluted weighted average number of shares in issue increased by 15 per cent compared to the prior period as a result of the capital raise relating to the Mattress Firm and Poundland acquisitions, as well as conversions of convertible bonds during the priod period,” Jooste said.

“Despite the 15 per cent increase in the diluted weighted average number of shares in issue, diluted sustainable earnings per share was only down by three per cent to 15.5 cents,” he added. “When adjusted for one-off Mattress Firm brand conversion costs of €48 million, €20 million kika-Leiner refurbishment costs and €5 million African restructuring costs, adjusted diluted sustainable earnings per share increased by four per cent to 16.6 cents.”

Jooste said with the group’s performance during the interim period, the momentum in the business is expected to continue and the group should perform in line with expectations.

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