DURBAN – The Spar Group said it expects its earnings to decline by as much as 30 percent for the six months to end March, negatively impacted by its acquired Polish business.
As a result Spar expects its basic earnings per share (Eps) to decline by between 20 percent and 30 percent, to be between 416 cents a share and 364c, down from last year’s 520c.
In May last year Spar announced that it was in talks to buy a controlling stake in Polish deli and supermarket chain Piotr i Pawel group as part of efforts to expand in Europe.
The group said today in a trading update that it completed the acquisition of the Polish business, Piotr i Pawel during the period and has secured the rights to the Spar license to trade in Poland.
“As expected, this business has reported losses, as it is being restructured and operations re-organised. This process has taken longer than expected and the finalisation of the legal administration of Piotr i Pawel has been further impacted by the Covid-19 pandemic, as a result of the suspension of court activity,” the group said.
It added that these delays have obstructed the resumption of normal trading operations, with adverse effects on both retail and wholesale performance reported.
“The adoption of IFRS 16 and a foreign exchange loss incurred on the Euro-denominated funding also adversely impacted the Polish business’ result,” Spar said.
Its headline earnings per share (Heps) are also expected to decline by between 17 percent and 27 percent to be between 434.6c and 382.2c, down from last year’s 523.6c.
However, the group said it has achieved revenue growth of 10.1 percent during the period, with strong trading reported in all geographies and assisted by the turnover from its business in Poland for the first time.
Spar expects to release its half-year results on May 21.
Spar share price was down by 2 percent to R164.79 a share on Friday afternoon.
BUSINESS REPORT ONLINE
By Sandile Mchunu