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Ekuseni plan helps PnP report improved interim results

By Eric Mkhunjulwa


Pick n Pay Stores Limited (PnP Group) presented a positive performance in its first trading period under its new Ekuseni Strategic Plan that was launched in May 2022 according to its August 2022 interim results.

The PnP Group turnover for the interim period increased to M51.3 billion (2021: M46 billion) and trading profit went up to M1.3 billion (2021: M1.0 billion). Profit for the period rose to M453.3 million (2021: M296.8 million). In addition, headline earnings per share grew to 97.73 cents per share (2021: 61.28 cents per share).

Even when normalizing for disruptions in the base period, Covid-19 liquor restrictions in Lesotho as well as in other countries in Africa, and due to the civil unrest in South Africa last year, the PnP Group turnover shows an encouraging increase of 8.2%.

Internal selling price inflation of 7.2% for the period reflects a highly inflationary environment, particularly towards the end of the reporting period. However, the Group maintained its commitment to supporting customers through lower prices, doing its best to hold selling prices below Consumer Price Index (CPI) Food, which rose from 8.6% in June to 11.3% in August.

“We have supported customers through an exceptionally difficult time, delivering lower prices and better value across Pick n Pay and Boxer,” PnP Group’s Chief Executive Officer (CEO) Pieter Boone said in an interview.

The Group’s gross profit margin increased from 18.2% to 19.4% (R10.0billion). However, the gross profit margin in the base period was depressed by the cost and disruption of the July 2021 riots.  Taking this into account, the gross profit margin contracted on a normalized basis by 0.6% pts – reflecting planned investments in lower prices, and significant increases in energy costs.

Pro forma profit before tax in South Africa increased by 17.1%, despite increased insurance and security costs following the July 2021 riots that took place in South Africa, inflationary pressures, and planned costs associated with implementing the Ekuseni plan. Group pro forma profit before tax rose by 22.2%, with a strong performance from TM Supermarkets in Zimbabwe.

“We have four franchise stores in Lesotho, and they continue to trade well,” PnP Group told Informative Business on Thursday.

The Rest of Africa segment contributed sales of M2.4 billion, an increase of 17.9%, despite challenging conditions in a number of markets. Pro forma profit before tax of M131.9 million (before the application of hyperinflation accounting) was up 44%, with another good performance from Zimbabwe.

On 17 May 2022 the Group launched the Ekuseni strategic plan and immediately put energy into implementing key elements of the plan. The results initially achieved within that short time have been very encouraging.

“The launch of our Ekuseni strategic plan in May was a landmark moment for the Group. I am proud of what our teams have achieved in the five months since that launch,” Boone said.

Boone added that the Group made it clear when they launched the Ekuseni plan that the 2023 financial year would be an investment year, with costs in implementing the plan, and investing to get the right prices for consumers.

“However, I am incredibly energized by the spirit and commitment of our teams. We are delivering for our customers, and there is plenty more to come from the Pick n Pay Group,” exclaimed the Boone.

Though encouraged by the initial progress, the Group recognizes that there is still much work remaining to be done in the multi-year Ekuseni plan. In addition, external headwinds, which includes inflationary cost pressures, are likely to be challenging in the second half of FY23. PnP Group will work towards mitigating these pressures, but the Group cautions that there will inevitably be an additional impact on the full-year result.

“Building on my commitment to greater transparency, we have for the very first time reported the turnover growth in our Boxer and Pick n Pay businesses separately. Stakeholders can now see why we are so excited about the performance and potential of Boxer. We are opening new Boxer stores rapidly and will accelerate our progress in the coming months,” indicated Boone.