Steinhoff may enter Czech Republic

Mar 08 2013 13:41
Garth Theunissen
furniture, couch, rest, relax


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Last Updated: 01/01/0001 at 12:00. Prices are delayed by 15 minutes. Source: McGregor BFA

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Johannesburg - Furniture manufacturer and retailer Steinhoff International Holdings [JSE:SHF] is unlikely to expand in South America for at least another year and will instead focus on expanding its operations in Europe, according to CEO Markus Jooste.

“We’d like to expand our operations in Portugal and Spain. We’d also like to enter other European territories where we’re not present - like the Czech Republic - and would also like to expand in Austria, Hungary and Poland,” Jooste told Finweek in a telephone interview on Friday.

“We’re unlikely to look at South America for the next year or so - I still haven’t been to Brazil.”

The group depends on Europe for about 55% of its revenue, with 42% stemming from southern Africa and about 3% coming from its operations in the Pacific rim.

Jooste told Finweek in September last year that the company planned to enter Brazil “one day” as sizeable acquisition targets in Western Europe are few and far between, following its 2011 purchase of Conforama for €1.2bn.

Jooste said on Friday that Steinhoff Europe’s expansion strategy would focus on nations where it could achieve at least 10% market share, while its budget-friendly products meant it had a greater chance of success in lower-income nations in Eastern Europe rather than richer countries like Germany, France or Switzerland.

The group was more than capable of servicing its net debt of R27.92bn, given that its capacity to generate cash from operations was between R12bn and R13bn per annum, he added.

“We still have unutilised debt facilities of R10bn so I don’t see our debt levels as a problem,” said Jooste.

“The group has more than enough capacity to carry that level of debt.”

Steinhoff’s half-year results released on March 5 showed that it grew revenue by 52% to R57.3bn in the six months to end-December, while attributable profit rose 11% to R3.24bn.

The company announced on the same day that billionaire investor Christo Wiese, who owns stakes in Shoprite, Pepkor, Brait SA and Invicta Holdings, had been appointed to the Steinhoff board.

 - Finweek

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