Massmart H1 HEPS up 13.7% to 416c

Diluted HEPS were 407.3 cents from a previous 343 cents.

An interim dividend of 252 cents was declared, unchanged from the previous period.

Operating profit before forex and integration costs was up 4.8% to R1.326 billion, while revenue was up 14.9% to R31.54 billion.

During the company's first six months as a subsidiary of Wal-Mart, group sales increased by 15.0% to R31.492 billion.

Commenting on the results, Massmart CEO Grant Pattison said: "It has been a very busy six months, with management focused on maintaining operating momentum while also implementing the Wal-Mart integration process.

"We are pleased with our trading performance, in particular an apparent gain in overall market share and are confident that the current period of investment will be good for the company."

The group's product inflation was 1.1% for the period, and this is the first time it moved into product inflation since 2009.

It said group trading was resilient with comparable sales increasing by 9.2%, indicating, when measured against national retail sales growth of approximately 8.7%, a gain in overall market share.

Sales in its African businesses represented 7.7% of total group sales and total African sales grew by 21.3% in rands and 12.8% in local currencies.

Massmart's divisional comparable store sales in Massdiscounters, which includes Game and Dion Wired, increased by 4.6% with estimated deflation of 5.0%, total sales increased by 11.8% and trading profit before tax increased by 8.5%.

"Foodco continues to expand with 15 stores - nine refurbished and six new now in the format, including two in Africa, and is performing at or above expectations," it said.

Divisional comparable store sales in Masswarehouse, which operates its Makro warehouse stores, increased by 11.6% with estimated inflation of 2.3%, while total sales increased by 18.3% and trading profit before tax increased by 12.4%.

Trading profit includes store pre-opening costs which were R22 million higher than in the prior period, the company comment.

"The acquisition of Fruitspot was effective 2 January 2012 and will assist Makro with its procurement and distribution of fresh and processed fruit and vegetables," the retailer said.

Massmart's divisional comparable store sales in Massbuild, which includes Builders Warehouse, climbed by 8.7% with estimated inflation of 0.5%, while total sales increased by 12.1% and trading profit before tax increased by 12.9%.

Divisional comparable store sales in Masscash, the group's wholesale and retail cash and carry business increased by 10.9% with estimated inflation of

5.2%. Total sales grew by 16.3% but, disappointingly, trading profit before tax decreased by 21.8%.

"The acquisition of Rhino Cash & Carry, comprising 14 stores, will be effective 1 March 2012, and will increase our total annualised Retail Cash & Carry sales to approximately R5 billion.

"It is a condition of the Competition Tribunal's ruling that Rhino needs to dispose of four stores by the end of June 2012, with the possibility of a further three month extension," Massmart said.

The period under review saw Massmart investing in a number of areas, including a 6% increase in space growth - trading space is now a total of 1,323,734m3; and stores stand at 330 following four store closures and 21 store openings.

Its annual rolling return on equity was 33.1% at December 2011.

Massmart said that for the 34 weeks to 19 February 2012, total sales increased by 15.1% and comparable sales increased by 9.2%, continuing the trends experienced at the close of the last financial period.

"The current trends of growth and capacity, including integration costs, will continue through to the end of the year, with sales performing well, but with operating margin under pressure," Pattison said.

"We await the rulings in both South Africa and Namibia regarding the separate legal challenges to the Wal-Mart acquisition which followed the approvals issued in June 2011 in both countries," he added.