Pepkor hit by R1.2bn writedown as building market contracts

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The writedown of its Building Company could result in earnings falling by about a third, due to a slowdown in the market

Pepkor, previously Steinhoff Africa Retail, said on Thursday earnings for its year to end-September may fall by a third due to a contraction in the building materials market.

The company has written down its specialised materials company, The Building Company, by R1.2bn, with earnings per share expected to fall by between 22.1% and 32.1% compared with the 83.6c in the prior comparative period. The group, whose brand’s include Pep, Ackermans, Incredible Connection and Timbercity, was a wholly owned subsidiary of Steinhoff until it was listed on the JSE in September 2017.

The Building Company represented 13% of Pepkor’s revenue and 3% of operating profit in the 2018 financial year. Pepkor has reported that its major business segments had performed well, saying its defensive discount and value-market positioning had paid off. Headline earnings per share was expected to rise by 7.7%-17.7% compared with the prior comparative period. Heps strips out one-off items, such as impairments.

 

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