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Shoprite sales grow almost 18% – but R560m diesel bill eats into profit, dividend

Shoprite’s local supermarkets business delivered a 17.5% increase in first-half sales, but its diesel bill of half a billion rand to mitigate power interruptions ate into profits and its dividend payout to shareholders.

Shares in the group fell more than 3% to R217.25 just after the market opened on Tuesday.

Due to the R560 million spent on diesel to operate generators across its stores during load shedding, the company was “not reporting the level of profit and dividend growth that would normally be associated with this level of sales growth”, CEO Pieter Engelbrecht said in a statement that accompanied results for the 26 weeks to 1 January, 2023.

Its trading profit increased by 8.6%, resulting in a trading margin of 5.7%, saying it was “notably impacted” by its hefty diesel bill, which represented an increase of R465 million over the comparative period last year. Dividends were hiked by 6.4% to 248c a share.

The group’s diluted headline earnings per share (DHEPS) increased by 10% to 577.5. The group generated more than R11 billion in cash from operations.

Engelbrecht said the core business managed its double-digit uptick in sales as customers spent R12.7 billion more with the group than they did in the same period last year.

Shoprite and Usave increased sales by 15.1%, while Checkers and Checkers Hyper saw sales rise by 16.9%.

“In both instances, this is growth ahead of the market, adding 1.4% to our South African market share as the business grew volumes, customers and basket spend.”

The company employed an additional 3 881 people in its supermarket businesses during the period, excluding the 4 480 people it employed from January 2023 through its acquisition of some Cambridge Food and Rhino Cash and Carry stores from Walmart-owned Massmart. –