Spar, the leader in wholesale and retail distribution based in Pinetown, Durban, announced on Thursday that it will not be distributing dividends for the second year in a row, even after reporting a ‘resilient performance’ for its 2024 financial year.
The company informed the market that dividend payments are not currently viable as it prioritizes its turnaround strategy and seeks to bolster its standing in the highly competitive South African retail landscape.
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Read: Despite slowing sales growth, Spar says strategic refocus is paying off
This decision to skip dividend payouts is likely to disappoint shareholders, who received 400 cents per share in dividends for FY2022 and more than double that in FY2021.
Following the publication of its recent results, the group’s share price fell over 3% during morning trading.
Spar’s share price
“The group has been focused on addressing various challenges over the last 18 months to secure financial stability, enhance balance sheet resilience, and boost its ability to take advantage of growth opportunities,” Spar noted in its financial results report.
“While significant progress has been made, work is still ongoing in these areas. Consequently, the board has determined that it is prudent not to declare a dividend for the year ending 30 September 2024 [2023: 0 cents per share],” it stated.
“This decision will be revisited in light of future macroeconomic and operational conditions. Improving capital allocation, including returns to shareholders, is a key priority for the board,” it added.
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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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