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Cashbuild revenue surges 15% as expansion pays off

Building material retailer Cashbuild jumped 8.3% on Tuesday after saying its December quarter revenue had grown 15% from the matching period in 2014. Its revenue over six months was 14% higher than in the previous year.
A Cashbuild outlet in Rustenburg, North West.<p>Picture:
A Cashbuild outlet in Rustenburg, North West.Picture: Martin Rhodes

The retailer of building materials said it was finalising its results for the period. It had opened 15 new stores since July 1 2014, which had contributed to 4% of the quarterly increase.

The group's 213 existing stores saw revenue rise by 11% compared to the previous period. The group sells building materials including cement, bricks, tiles, paints, bathroom suites, geysers and hand-held and power tools.

"Fifteen percent growth for the period is extremely good," Avior retail analyst Kyle Rollinson said on Tuesday. "Cashbuild hasn't been too aggressive in opening (new) stores - it has been very prudent," he said.

This meant that Cashbuild was not "over-exposed" to SA's poor macro-economic environment and had seen "good organic growth and volumes".

Rollinson also said that despite SA's poor economy, "we haven't seen pressure trickling down to the consumer". But he said the outlook for consumers was negative because of, among other things, food-price inflation caused by the drought.

Cashbuild said transactions through its tills during the second quarter had risen 4% from the previous comparative period. "New stores increased with 4% and existing stores remained at similar levels for the second quarter," it said.

During the second quarter, five new stores were opened, three were refurbished and one store was relocated. This brought the number of stores trading at the end of the quarter to 228.

The group said that selling inflation was at 2% at the end of last month, compared with December 2014 prices. Gross profit margins were at similar levels to those reported for the first half of the previous year.

SA stores led the way with 88% of total sales. The rest came from stores in Lesotho, Swaziland, Botswana, Malawi and Namibia.

In SA, large portions of government infrastructure spend have shifted to road infrastructure and human settlements in rural areas, boosting smaller listed companies that service the building sector.

The country's biggest construction groups have seen their market capitalisations plunge since the end of the 2010 Soccer World Cup in SA. This has increasingly pushed them over the country's borders.

Meanwhile, competition authority penalties for collusion in the construction industry have added pressure to difficult domestic and global markets.

Source: Business Day



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