Johannesburg – South African household goods company
Steinhoff International Holdings [JSE:SHF] on Tuesday reported diluted headline earnings per share of 244.2 cents for the year ended June 2010, down 1% from the previous year's 241.9 cents.
A distribution of 63 cents per share was declared from 60 cents in 2009.
The I-Net Bridge consensus forecast was for diluted headline earnings per share of 230.3 cents and a total dividend per share of 59.3 cents per share.
Revenue was down 6% to R48.0bn, while operating profit before capital items grew 1% to R5.207bn. Cash generated from operations increased by 45% to R5.7bn. The group's operating margin increased to 10.8% from 10.1% in 2009.
"While the consumer environment remains challenging and economies and currencies volatile, we are delighted to report another pleasing set of results," said Steinhoff International.
The group said its mainland European businesses reported improved sales performances supported by a resilient economy and strong consumer behaviour in countries such as Switzerland, Austria and Germany.
Revenue was at R16.8bn in Continental Europe, R8bn in the UK, R2.6bn in the Pacific Rim and R20.7bn in Southern Africa.
"The general market conditions in the southern African region remained depressed during the financial year, but the diverse nature of the African industrial businesses again resulted in revenue growth," said the group.
Steinhoff International added that with the group's reporting currency, which is the rand - strengthening by 14% during the year against the euro, coupled by the weakness in the eastern European currencies in which the majority of the group's manufacturing revenues are generated, the real growth within the group's underlying businesses is not apparent when translated and evaluated in rand.
The group said that a further factor impacting upon revenue is the growth in intra-group-trading, which increased by 14% in the year under review.
"This is in line with our strategy to focus on sustainability and quality of revenue, which leads to higher margins, accordingly, as a result of the effect of the elimination and consolidation of intra-group sales as well as the impact of the strengthening rand against the euro, the group's rand denominated revenue was R48bn from R51bn in 2009," the group said.
Profit before taxation for the period increased by 1% to R4.2bn rand and profit attributable to equity holders of the parent increased by 5% to R3.5bn.
At the end of June 2010, the group had net interest-bearing debt of R9.2bn, down from R8.8bn rand in 2009.
Looking ahead, the group said that rand strength would continue to impact upon the group's rand reported earnings if the growth in euro profits does not outperform the effect of the change in the average rand translation rate.
"Our integrated business model remains a key competitive advantage and, together with its flexibility of supplementing its own produced goods with third-party sourced products, continues to achieve market share gains," said the group.
"In line with our business model of increasing the group's retail footprint, corporate opportunities and strategic partnerships are continuously evaluated, in Europe and in southern Africa," the group added.
Steinhoff International said that while the results for the group in 2010 were satisfying, it firmly believes that it has the appropriate strategy in place and remains confident about the future.