Cashbuild revenue up 30%

Posted On Friday, 20 January 2006 02:00 Published by Commercial Property News
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Cashbuild has reported a 30% increase in its revenue for the second quarter of its financial year to end-December compared to that of the year-earlier period

Pat Goldrick CashbuildListed building materials group Cashbuild (CSB) has reported a 30% increase in its revenue for the second quarter of its financial year to end-December compared to that of the year-earlier period, as well as 35% y/y revenue growth for the six months to end-December.

Although in line with management's expectations, this represents a slowdown on the 43% revenue growth reported during the first quarter of the year, the group said in a trading statement this week

Cashbuild's pre-existing stores contributed 19% of the revenue growth, it noted, while the 22 new stores that were opened since the end of the 2004 financial year contributed 11%. Transactions through the tills increased by 27% and the number of units sold for the quarter rose by 17% versus the year- earlier period.

The group said it continued to experience a favourable trading environment and this, coupled with initiatives to grow the top line, had contributed to the overall increase in revenue.

Gross margins in first quarter had come under slight pressure, but had recovered to the company's expected levels during the second quarter.

The group continued its strategy of investing in the business in order to step up and support future growth.

The areas of operational expenses influenced by this strategy during the period were, it said: a continued intense and comprehensive advertising campaign; free local customer delivery service (currently at budgeted levels); people investment; the appointment of an experienced operations manager to concentrate on the growth of the neighboring countries; additional people employed and extra shifts worked to cope with volumes and to ensure that suppliers are paid timeously; extra staffing in support of extended trading hours; additional internal security and field auditors; a 15% salary increase (effective July 1, 2005) for the majority of non-managerial employees at store level resulting from the implementation of Cashbuild's formal grading system (equating to a total company increase of 9%); and continued technical and professional support to remedy issues in the implementation of the new IT system.

A total of seven new stores had been opened during the second quarter, in addition to one refurbishment and one relocation, giving the group a total of 144 stores as of end-December. For the six months, Cashbuild for the first time opened a record 11 new stores, equaling the highest number of stores ever opened during a full financial year.

"This doubling on opening new stores also results in an increase to opening costs, with the real revenue and profit benefits only materialising at a later stage," the group explained. "The principle reasons for the step-up of new store openings are that Cashbuild has been perusing a number of sites during the past five years, which have now started to come to fruition. Also, shopping centres are now being built in rural areas and townships where Cashbuild is a strong brand and a preferred tenant.

"Although this investment strategy together with the stepped-up store expansion is putting earnings for the first half under pressure, management has put in place a comprehensive operational plan to ensure that the stated objective of growing operating profits by at least 10% in excess of inflation will be achievable for the full year," the company concluded.

Last modified on Tuesday, 02 July 2013 21:40

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