Strong trading in Clicks lifts Group earnings by 18%
Release Date: 2011/10/20
Cape Town – Clicks Group today reported an 18.1% increase in diluted headline earnings per share to 249.7 cents for the year to August 2011 as the Clicks chain continued its strong performance.
A final distribution of 88.0 cents per share was declared, bringing the total distribution for the year to 125.0 cents, an increase of 17.7%.
Return on equity increased from 50.8% to 62.2% for the year, boosted by the share buyback programme.
Chief executive, David Kneale, said: “Trading conditions became increasingly challenging during the year. We also encountered the high base set in 2010 which included the FIFA World Cup. Selling price inflation averaged only 1.6% for the year, compared to 5.4% in the previous year, which reduced turnover growth by almost four percentage points.”
The group’s retail turnover increased by 10.9% to R10.8 billion. The Clicks chain grew sales by 13.0% and continued to gain share of the increasingly competitive healthcare market. Clicks reported strong operating profit growth of 25.8%.
Clicks opened its 400th store in August as 31 new outlets were added during the period, the highest number in a single year. The national pharmacy footprint was extended to 283 with the opening of a further 32 dispensaries. Clicks plans to grow its store base to 500 in the next three years.
UPD, the group’s pharmaceutical distributor, increased turnover by 4.2%, impacted by lower inflation and the faster growth in sales of lower value generic medicines. Despite the challenging conditions UPD increased its share of the private pharmaceutical wholesale market from 22.7% to 23.1%.
Musica’s performance slowed in the second half and turnover was 5.9% lower for the year as the decline in the CD and DVD markets accelerated. Musica maintained market shares and showed good growth in gaming, technology and accessories. The Body Shop operating profit increased by 3.5% despite the brand experiencing price deflation of 6.6%.
The group’s operating margin expanded by 40 basis points to 6.6%, translating into a 13.9% increase in operating profit to R938 million.
The group continues to be highly cash generative, with the cash inflow from operations increasing by R244 million to R677 million. Management is committed to returning excess capital to shareholders and repurchased shares totalling R552 million in the past year.
Kneale said as a result of the group’s continued strong cash generation the board has reduced the distribution cover from 2.0 to 1.8 times from the 2012 financial year, which will further enhance returns to shareholders.
On the outlook for the year ahead, Kneale said consumer spending is expected to remain muted in the current uncertain economic climate. “Selling price inflation is anticipated to remain low and the group will face increasing cost pressures in employment, property, transport and utilities.”
“Our focus for 2012 will therefore be on driving sales volume and containing costs. We remain well positioned in the medium term through the market leadership and growth potential of our brands,” he said.