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Rand buffets Steinhoff earnings

Mar 02 2010 18:36 Andile Makholwa

Company Data

Steinhoff Interntl Hldgs [JSE : SHF]

Last traded R25.64
Change R-0.04
% Change -0.16%
Cumulative volume 1.61m
Market cap R45.38bn

Last Updated: 13/02/2012 at 19:33. Prices are delayed by 15 minutes. Source: McGregor BFA

 

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Johannesburg - The strengthening of the rand against the euro continued to compress earnings of furniture group Steinhoff International Holdings [JSE:SHF], the company said on Tuesday.

"Rand strength will impact the group's full year rand reported earnings if the growth in euro profits does not outperform the effect of the change in the average rand translation rate," it said in commentary to its interim results ended December

Steinhoff generates more than half of its revenue from its offshore operations.

Steinhoff posted a 4% fall in revenue to R24.8bn and a 1% slide in diluted headline share earnings to 112.8 cents. Headline earnings increased 4% to R1.55bn.

Although consumer spending remained depressed, its retail business in Europe delivered commendable results owing to the store layout and format redesigns, it said.

"The growth experienced within the group`s European retail operations led to further integration with intercompany sales increasing by 28% to R7.2bn. The success of the vertically integrated business model is now more prominent as intragroup volumes are increasing," it said.

The African timber and raw material operations performed to expectations and it remained well positioned to take advantage of growth when the industry recovers. This was despite the pressure on the construction and furniture sectors.

Steinhoff's freight and logistics division delivered a strong performance on the back of increased supply-chain and warehousing service contracts, and the sugar and agriculture division reported a substantial improvement.

In line with its business model of increasing the group's retail footprint, Steinhoff said it would continuously evaluate corporate opportunities and strategic partnerships both in Europe and in southern Africa.

It said its vertically integrated business model remained a key competitive advantage.

"The buying-down trends in consumer spending patterns continue to benefit the group's mass-market discount positioning and bodes well for a stable performance in the remainder of the financial year."

- Fin24.com

 
 
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