Spar Group reports earnings of 262.1c

HEPS were up 0.6% to 279.8 cents.

An interim dividend of 142 cents per share was declared, from 140 cents a year ago.

The group's turnover grew 9.1% to R19.1 billion, while operating profit increased by 4.1% to R706.6 million. Revenue was at R19.2 billion from R17.7 billion previously.

Trading for the period under review was challenging, Spar said, with consumer spending still under pressure, continued low food inflation below 2% and a very competitive retail environment.

It added that the increasing oil price had also directly affected group delivery costs.

The effect of these led to total costs increasing 16.8%. Without them 'normal' costs were up 7.8%, it said.

Spar wholesale turnover of R15.9 billion was up 7.2%.

Retail trading space increased to 916,458sqm with 15 new stores opened.

Store numbers in the group's liquor division, TOPS increased to 481 with 23 new stores opening during the six month period.

The company said liquor trading remained extremely strong with ex distribution centre turnover increasing 19% to R1.3 billion.

Build it, Spar's building material division, increased turnover 21.4% to R1.88 billion.

The group said it was confident that 2011 capital expenditure would not exceed R170 million and the extension to the perishables facility at its Eastern Cape distribution centre was progressing according to timetable and budget, with anticipated handover of the facility scheduled for September 2011.

Looking ahead it said it anticipated that the tough trading environment would continue for the remainder of the financial year, however, continuing lower interest rates and increasing levels of food inflation improved the outlook for trading.