Spar Group H1 dil HEPS 283.6c vs 262.1c

An interim dividend of 155 cents per share was declared, from 142 cents a year ago.

The group's turnover grew 13.6% to R21.7 billion, while operating profit increased by 10.8% to R782.8 million.

"Trading profit for the period under review reflected a pleasing improvement over the same period last year. The consumer remained under pressure, high unemployment levels persisted and food retail competition intensified, which all led to a challenging trading environment. This was partly countered by higher internal inflation of 7.2% for the period," the company said.

Profit before tax increased 11.4% for the period and was impacted by tighter gross margins, down from 8.0% to 7.9%, and lower marketing income.

Spar wholesale turnover of R17.9 billion increased by 12.1% and was supported by growth in retail trading space of 1.63%.

Store numbers at TOPS, the company's liquor division increased to 523 with 25 new stores opening during the first half of the year. Wholesale turnover for the period increased 19.7% to R1.6 billion.

Spar's DIY and building material division, Build it reported wholesale turnover growth of 19.2% to R2.25 billion.

Eight new stores were opened in the period.

During the period the group's retail division took on two new stores temporarily which, together with two other corporate stores, are in the process of being sold.

"Performance in this division will show an improvement for the year to

September 2012. This division is profitable after the relevant wholesale profit is taken into account, which affirms our decision to protect these retail sites," the retailer commented.

Total operating expenses over the period increased by 11.5%, with fuel costs up 38% being a major contributing factor, and the once-off KwaZulu-Natal distribution centre strike costs adding a further R12 million.

Looking ahead, the group said it did not expect market conditions to change significantly over the remainder of the financial year and consequently expects to deliver a satisfactory performance for the second half of the year.