Spar, the leader in wholesale and retail distribution located in Pinetown, Durban, announced on Thursday that it will not be issuing dividends for the second consecutive year, despite reporting a ‘resilient performance’ for its 2024 financial year.

The company informed the market that dividend distributions are currently unfeasible as it concentrates on its turnaround strategy, aiming to bolster its position in the highly competitive South African retail market.

Read: Despite slowing sales growth, Spar claims strategic refocus is yielding positive results

This decision to omit dividend payments is likely to disappoint shareholders, especially since they received 400 cents per share in dividends for FY2022, and more than double that for FY2021.

After the announcement of its recent results, the group’s share price fell by over 3% during morning trading.

Update on Spar’s share price

“The group has focused on addressing various challenges over the past 18 months to ensure financial stability, enhance balance sheet resilience, and improve its ability to seize growth opportunities,” Spar stated in its financial results report.

“While significant progress has been made, work remains ongoing in these areas. Consequently, the board has decided it is prudent not to declare a dividend for the year ending 30 September 2024 [2023: 0 cents per share],” it indicated.

“This decision will be evaluated in light of upcoming macroeconomic and operational conditions. Improving capital allocation, inclusive of returns to shareholders, continues to be a priority for the board,” it noted.

Key financial highlights (continuing operations)

• Group turnover of R152.3 billion, an increase of 4%
  Earnings before interest, tax, depreciation and amortisation (on a pre-IFRS 16 basis) R3.8 billion, a rise of 13.9%
  Net borrowings R9.1 billion (decreased by 8.9%)
  Net borrowings/EBITDA* 2.41x (2023: 3.02x)
  Earnings per share 855.9 cents (up by 24.5%)
  Profit after tax R1.6 billion (a 20.9% increase)

*Earnings before interest, tax, depreciation and amortisation calculated on a pre-IFRS 16 basis

SALIENT FEATURES – CONTINUING OPERATIONS

Year ended
Year ended 30 September
30 September 2023
R million 2024 Represented* % change
Turnover(1) 152 337.5 146 461.0 4.0
Operating profit 2 895.5 2 516.7 15.1
Earnings per share (cents) 855.9 687.2 24.5
Headline earnings per share (cents) 917.9 826.0 11.1
Diluted headline earnings per share (cents) 917.5 825.7 11.1

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