Shoprite Holdings Limited have incurred trading losses of nearly 62 million Rand in its non-RSA operations during its financial half-year compared to R552.7 million earned in the prior corresponding period.
In a statement announcing its unaudited financial results in the 26-week period up to December 30, 2018, the South African retail giant incurred trading losses of R61.8 million, triggered by a major currency devaluation of 85.1 per cent in the Angolan market.
But the Group announced that sales in its Zambian segment showed an improvement in the second quarter of 14.7 per cent.
“The Supermarkets Non-RSA segment reported a trading loss of R61.8 million versus a trading profit of R552.7 million in the corresponding period. The decline is mainly attributed to the unprecedented 85.1 per cent currency devaluation (against the USD since January, 2018) in Angola. As a result, gross margin was under pressure with the inability to pass on cost inflation to consumers in the selling prices of goods,” Shoprite revealed.
“The Angolan economy remains in recession, adversely affecting consumption expenditure in the country, with mostly our price sensitive customers being unable to maintain spending levels. For the six months to December 2018, the economy of Angola was again assessed to be hyperinflationary.”
Foreign exchange rate losses were equally incurred by the Group of over R3 million owing to currency depreciation experienced in both Angola and Zambia in the six-month period last year.
“The Group recorded an exchange rate loss of R3.4 million for the reporting period mainly due to the currency devaluation in the Angola kwanza and Zambia kwacha since June, 2018. The performance of Supermarkets Non-RSA is dependent on foreign currency availability in Angola and Nigeria together with stable currencies,” it stated.
While growth within the Group’s SA outlets remained robust, its non-RSA operations continued to endure a sluggish performance owing to currency volatility in some markets.
“Trading in 14 countries in the rest of Africa and Indian Ocean Islands, Supermarkets Non-RSA recorded a decline of 13.3 per cent in sales in rand terms and contributed 14.7 per cent to the Group’s sales. Non-RSA sales growth remained positive in constant currency terms, although currency devaluations and poor trading conditions in many countries, contributed to a below par performance,” Shoprite stated.
But the Group announced that sales in its Zambian segment showed an improvement in the second quarter of 14.7 per cent.
“Zambia is now almost self-sufficient in terms of local supply of fresh and perishable lines. Zambia’s sales in local currency are showing an improvement in the second quarter of 14.7 per cent,” stated Shoprite.
