South Africa: Massmart's Fiscal Year 2020 is Mixed

Par ediallo - 9 March, 2021 - 16:54

In South Africa, the poor economic conditions associated with the coronavirus pandemic have not spared any part of the economy. In the distribution sector, for example, few companies have escaped the slowdown in their activities.

Massmart Holdings, the South African subsidiary of US retail giant Walmart, published on March 8 its financial results for its 2020 fiscal year ended December 27. In detail, sales amounted to 86.5 billion rand ($5.6 billion), down 7.7% from the previous year.

The group explains this underperformance by the disruption of its activities related to the coronavirus pandemic as well as by restrictions in the sale of certain product categories such as liqueurs.

Despite this drop in sales, the company was able to achieve a 5.5% increase in earnings before interest and taxes to 1.17 billion rand and to reduce its financial costs thanks to lower interest rates and good management of its working capital.

In addition to its positive results, it should be noted that the company recorded an increase in net losses to 1.8 billion rand and a foreign exchange loss of 381 million rand due to currency fluctuations in the other African countries where it operates.

In the face of its declining cash flow and poor economic conditions, Massmart indicates that it will optimize its portfolio of activities and concentrate its investments in segments with higher profitability.

As part of this restructuring, which is expected to last until the second quarter of 2021, the company announced the sale of three assets: Cambridge Food, Rhino and Massfresh. This process is expected to be facilitated by the Barclays banking group.

As a reminder, Massmart owns 423 stores in 13 countries in sub-Saharan Africa and employs more than 48,000 people.

Hope Olodo