Business News 7.9.2016 10:27 am

Steinhoff’s organic growth pays off

Supplied photo

Supplied photo

The group says the resilience of the discount market continues to underpin good organic growth.

South African retail group Steinhoff International on Wednesday delivered a solid set of results for the year ending in June posting revenue growth of 33 percent to €13.1 billion, up from €9.8 billion the previous year.

The group said the resilience of the discount market continued to underpin good organic growth.

The company’s operating profit also improved by 32 percent to €1.5 billion, supported by continued market share gains in strategic product categories.

The group said it earned 73 percent of its operating profit in Europe, while 25 percent of operating profit was earned in Africa and 2 percent in Australasia.

Steinhoff chief executive Markus Jooste said the company continued to see opportunities for growth within its key markets in the territories where the group operated.

“Gains resulting from the vertical integration strategy and effective group supply chains continue to support operating margin growth, and we remain confident in our ability to keep prices to consumers low,” Jooste said.

During the period to June, Steinhoff increased its retail market share and improved its ability to influence price and affordability through building capacity in existing supply chains.

Steinhoff invested in strategic partners to the European supply chain focused on the key product categories such as bedding and kitchen manufacturing.

The group has gained board recommendations, and awaits shareholder and regulatory approvals on the formal offer to buy the Poundland retail business in the United Kingdom for £597 million and the Mattress Firm retail business in the United States for $3.8 billion.

The Mattress Firm investment would create the world’s largest multi-brand mattress retail distribution network and facilitates Steinhoff’s entry into the United States.

Steinhoff said the outlook was underpinned good growth, as the discount markets showed resilience.

– African News Agency (ANA)

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