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Johannesburg - Pan-African food retailer Shoprite Holdings has said its difficulties in finding trading sites elsewhere on the continent are abating, thanks to the willingness of South African banks to finance property development.
Speaking at the group's interim results presentation in Johannesburg on Tuesday, Shoprite CEO Whitey Basson said SA banks were increasingly offering loans at affordable rates to property developers in some of the group's investment destinations.
On previous occasions, Shoprite said its expansion plans were hindered by the continent's poor infrastructure and property developers' difficulties in finding finance to build shopping centres. However, it is now preparing to open six new stores in places like Nigeria, Angola and Mozambique.
Basson said the group was becoming particularly bullish about Nigeria, where it operates about 20 stores. He added that the country's burgeoning population presented a growth opportunity.
In the six months to end-December 2009, the R42bn retailer said its diluted headline share earnings grew 13.3% to 208.5c while turnover was R33.1bn, 11.9% higher. An interim dividend of 80c was declared, 14.3% up from 2009.
However, owing to the appreciation of the rand against the major African currencies, food imports from South Africa became more expensive and rubbed out the benefits of lower food inflation in its African operations, resulting in margins coming under pressure.
Over the period, Basson said, the group grew its trading margin to a record 5.0%, largely due to efficient cost management, while market share also increased by 1.2% to 29.8%.
Retail analyst Chris Gilmour of Absa Asset Management said Shoprite's positioning as a value retailer could further lift the trading margin to 6%, if it were to continue with its Africa expansion.
In addition to Nigeria, Angola and the rest of the oil-producing countries offered great opportunities for the retail giant, added Gilmour.
Basson also confirmed that Shoprite was exiting India, where it operated a store for six years, due to constraining legislation and price rules which made a single-store outlet unprofitable.
- Fin24.com
