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Massmart sees tough second half after profit slide

Aug 22 2013 10:39 Reuters


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Johannesburg - Walmart's South African unit Massmart reported a 9.9% fall in first-half profit on Thursday as debt-laden consumers at its home market cut down on spending.

Massmart, which sells everything from groceries to televisions, said headline earnings per share (EPS) before currency swings totalled 181 cents in the six months to end-June compared with 201c a year earlier.

Massmart, which generates nearly 10% of its sales in several African countries outside South Africa, said favourable currency swings added R134 to the bottom line, causing headline EPS to increase by 52%.

Sales rose 8.9 % to R32.4bn and the company maintained its dividend payout at 146 cents per share.

After more than two years as an investor darling, South African retailers are fast falling out favour due to concern that high personal debt levels and reluctance among banks to lend more will squeeze spending in the country.

"There's little on the macroeconomic horizon that suggests any improvement," said Massmart, which is 51% owned by Walmart. "We believe the remainder of the year will continue to see sales under pressure."

South African retail sales grew by a smaller-than-expected 1.9% in June, data from the government statistics office showed last week.

Shares in Massmart are down about 20% so far this year, lagging behind a 10% gain in Johannesburg's All-share index.

 

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