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Interim results show Cashbuild cashing in on home improvement boom

Group declares a half-year dividend on double-digit growth.
Cashbuild's share price surged more than 6% in morning trade, following the release of its latest results. Image: Supplied

Cashbuild – the cash-flush listed retail building materials giant – posted a strong set of interim results for the six months ended December 27, 2020 on Tuesday.

Most key financial metrics showed double-digit growth as the group got a boost from the ongoing pandemic-induced home improvement boom.

The 317-store group (including 58 P&L Hardware stores) reported a 21% increase in revenue and a gross profit increase of 29% for the period, which also saw its gross profit margin percentage increasing from 24.8% to 26.4%.

Cashbuild’s headline earnings per share (Heps) more than doubled (102%), compared to its  prior period, from 762.4 cents (2019) to 1 540.7 cents.

Read:
Italtile defies with double-digit growth in half-year turnover, profit and dividend
Cashbuild is on the up

This resulted in the group declaring an interim dividend of 724 cents (2019: 435 cents) per ordinary share, which it noted “came out of income reserves”. The interim dividend is 66% up on the comparative half-year.

Cashbuild, which agreed to buy The Building Company (TBC) from Pepkor for R1.07 billion in August last year, said that its cash and cash equivalents increased to just over  R2.8 billion for the period. It added that the increase came as a result of “increased profitability and higher creditors’ balances due to suppliers’ payments effected after half-year close”.

The group did not give an update on TBC in its short-form interim results Sens statement on the JSE on Tuesday. TBC, which includes chains such as Buco, Timbercity and Tiletoria, is expected to become part of the group later this year once the acquisition receives approval from the competition authorities.

Read: Cashbuild to buy Pepkor’s building company

“Operating expenses, including new stores, were well controlled considering the revenue growth, increasing by 11% [existing stores 9% and new stores contributed 2% of the increase], resulting in the operating profit increasing by 92%,” the group noted.

“During the period, Cashbuild opened three Cashbuild stores; refurbished 11 Cashbuild and one P&L Hardware stores and relocated two Cashbuild and one P&L Hardware stores,” it said, adding that one Cashbuild and three P&L Hardware stores were closed following the expiration of lease agreements.

“Cashbuild will continue its store expansion, relocation and refurbishment strategy in a controlled manner, applying an even more rigorous process, due to the Covid-19 pandemic and associated economic uncertainties,” it pointed out.

Prospects

The group highlighted that revenue for the six weeks post its half year-end has increased 24%, compared to the same period in the prior year.

Despite its robust half-year performance and continued double-digit revenue growth into January and February, Cashbuild sounded a cautious note at the end of its JSE interim results statement.

“Management expects trading conditions to remain uncertain due to the ongoing Covid-19 pandemic and its economic impact,” it said.

Cashbuild’s share price surged more than 6% (to R321.01 per share) in morning trade on Tuesday, following the release of its latest results.

The stock is up some 27% for the year to date.

Cashbuild share price graph

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