Cashbuild expects higher earnings

27 Jul 2009

Retailer of building materials Cashbuild said in a voluntary trading update on Monday, 27 July 2009, that revenue was up 18% from the fourth quarter of the prior financial year.

The group said it expects earnings per share and headline earnings per share to increase by between 2% and 12% for the year under review, compared with the year ended 30 June.

Cashbuild said 22 stores opened since 1 July 2007 contributed 10% of the increase in revenue, while existing stores (161 stores) contributed 8%.

Revenue for the financial year increased by 25%, with new stores contributing 7%, and existing stores 18%.

Transactions through the tills during the fourth quarter increased by 12% with new stores adding 9% and existing stores 3%.

For the financial year transactions increased by 9% with new stores adding 7%, while existing stores added 2%, Cashbuild said.

Units sold increased by 4%, with existing stores declining by 3%.

For the financial year units sold increased by 19% with existing stores increasing by 12%.

"Two new stores were opened during this quarter, bringing the number of stores trading at the end of the financial year to 183. One store was relocated during this quarter and four stores were refurbished," Cashbuild said.

"Management are satisfied with the growth in revenue experienced during this fourth trading quarter, albeit at lower levels than experienced during the prior three quarters.

"This 18% growth on top of an 18% growth achieved in the prior year fourth quarter is acceptable in a tough trading environment," Cashbuild said.

"As mentioned in the third quarter update, the substantial reductions in the price of steel in recent months resulted in the prices of steel-related products having decreased accordingly.

"Steel-related products being a big portion of Cashbuild's business, as well as the level of stockholding has, in the third quarter and for part of the fourth quarter had a short-term negative effect on gross margins as Cashbuild has marked down existing stockholding in line with company strategy of lowest everyday pricing," it added.

The group said that with a once off negative impact on the gross margins management expected earnings per share and headline earnings per share to increase by between 2% and 12% for the year under review.

Cashbuild said it would release results for the year ended 30 June on about 15 September.

At 10.40am Cashbuild had added R1.10, or 1.60%, to R70 on the JSE.

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