Spar Reports Strong Performance But Declines to Issue Dividends

Spar, the leading wholesale and retail distributor located in Pinetown, Durban, announced on Thursday that it will not be paying dividends for the second consecutive year, despite showcasing a ‘resilient performance’ for its 2024 financial year.

The company informed the market that dividend distributions are currently unmanageable as it prioritizes its turnaround strategy and seeks to fortify its position in the highly competitive South African retail landscape.

Read: Despite slowing sales growth, Spar says strategic refocus is paying off

This decision to skip dividend payments is likely to dishearten shareholders, particularly after they received 400 cents per share in dividends for FY2022, and more than double that amount in FY2021.

In light of its recently released results, the group’s share price fell by over 3% during morning trading.

Spar’s share price

“The group has focused on addressing various challenges over the past 18 months to ensure financial stability, bolster balance sheet resilience, and improve its capability to capitalize on growth opportunities,” Spar stated in its financial results report.

“While significant progress has been made, work remains ongoing in these areas. Consequently, the board has determined it prudent not to declare a dividend for the year ending 30 September 2024 [2023: 0 cents per share],” it stated.

“This decision will be evaluated again based on future macroeconomic and operational conditions. Improving capital allocation, including returns to shareholders, continues to be a priority for the board,” it added.

Key financial highlights (continuing operations)

• Group turnover of R152.3 billion, a 4% increase
  Earnings before interest, tax, depreciation and amortization (on a pre-IFRS 16 basis) R3.8 billion, up 13.9%
  Net borrowings at R9.1 billion (down 8.9%)
  Net borrowings/EBITDA* 2.41x (2023: 3.02x)
  Earnings per share of 855.9 cents (up 24.5%)
  Profit after tax of R1.6 billion (a 20.9% increase)

*Earnings before interest, tax, depreciation and amortization calculated on a pre-IFRS 16 basis

SALIENT FEATURES – CONTINUING OPERATIONS

Year ended
Year ended 30 September
30 September 2023
R million 2024 Represented* % change
Turnover(1) 152 337.5 146 461.0 4.0
Operating profit 2 895.5 2 516.7 15.1
Earnings per share (cents) 855.9 687.2 24.5
Headline earnings per share (cents) 917.9 826.0 11.1
Diluted headline earnings per share (cents) 917.5 825.7 11.1

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