Pick n Pay earnings down 15.1%

Diluted headline earnings per share were at 139.92 cents from 162.10 cents previously. The I-Net Bridge consensus forecast was for diluted HEPS of 161.3 cents and a dividend of 123.8 cents per share.

The group declared a total dividend of 108.35 cents from a year ago's 142.50 cents for Pick n Pay Stores, and a total dividend of 63.48 cents for Pick n Pay Holdings, from 69.28 cents previously.

Group turnover was at R55.3 billion, 8.1% above last year and trading profit for the year of R1.268 billion, at a margin of 2.3%, was 10.6% down on last year.

"Significant investment costs have had an impact on profit growth for the year, most notably the upfront launch costs of Smartshopper, the implementation of specialist category buying and the continued investment in our central distribution capability, all of which will improve future operating efficiencies and enable us to serve our customers better," the company said.

EBITDA was down 4% for the year to R2.074 billion but was up 9.6% for the second six-month trading period.

The company's gross profit margin for the year grew from 17.8% to 18%.

Net cash from operating activities rose to R1.559 billion from R3.5 million last year due to significant improvements in working capital management, the group said.

Pick n Pay commented that turnover growth was encouraging, with the most significant growth coming from the LSM 4-7 market, with Boxer a strong competitor in this arena, and from its smaller format stores.

"In addition, our private label, clothing, pharmacy and liquor divisions also delivered strong turnover growth," it added.

In September 2011, after a lengthy dispute with the Australian Competition and Consumer Commission, Pick n Pay sold its Franklins business to Metcash Limited for R1.2 billion, net of fees.

"Franklins continues to be disclosed as a discontinued operation, with its

results from operations for the seven months to 30 September 2011 and the subsequent profit on sale of the business being disclosed separately from continuing operations," Pick n Pay said.

In February 2012 the retailer purchased an additional 24% stake in its associate TM Supermarkets in Zimbabwe for R102.5 million, taking its total investment to 49%.

"The business is currently incurring losses, our share being R1.9 million for the year. However, we are confident of its future prospects and are looking forward to playing a part in growing the business in Zimbabwe," the grocer noted.

At 29 February 2012, Pick n Pay's total number of stores outside SA, both owned and franchised, was 94.

Looking ahead, the group will open at least seven new supermarkets and 15 liquor stores in SA next year.

In terms of its Boxer division, it intends to open 22 superstores, nine Punch supermarkets, four Boxer Builds and 10 liquor stores next year.

Pick n Pay said that despite a challenging year, its improved performance over the last six months gave it confidence in the work that it had done in repositioning the group for the future, and this gave it good momentum into the 2013 financial year.

"A significant portion of our transformation strategy has been implemented.

There is still much work to be done in seeing the strategy through to completion, however we have reached the point where the benefits of the changes to date are starting to be felt and are expected to accelerate in the year ahead," the Cape Town based company said.