Cashbuild posts second surprise revenue rise

Cashbuild reports a 13% rise in fourth quarter revenue, signalling a continuing improvement in the building materials market.

For much of last year, protests, strikes at platinum mines and the fallout from an unsecured lending boom halted sales growth at the group, which largely operates in the lower-end of the building materials segment. But the fourth quarter update issued yesterday was the second in a row that surprised on the upside.

The company, headed by Werner de Jager, said stores opened since July 1 2013, contributed 4% of the fourth quarter increase, while its 198 existing stores rose by 9%.

“The growth for the fourth quarter together with the growth of previous quarters reported, equates to an increase in revenue for the year of 13%, 8% of which was contributed by existing stores,” it said.

Cashbuild’s customers are typically “bakkie” builders, contractors, farmers, traders, large construction companies and government-related infrastructure developers.

Selling inflation was at 2% at the end of June compared with the same month last year.

Gross profit percentage margins have remained above levels reported at the half year, the group said.

It has about 222 stores, mostly in SA, but also in Malawi, Namibia, Botswana, Swaziland and Lesotho.

Late last month, the FNB/BER Building Confidence Index said the biggest fall in confidence was registered by retailers of building materials.

Confidence was at 91 in the first quarter of the year, but in the second quarter it fell to 66 index points. Confidence was lower despite robust growth in sales and profitability.

John Loos, FNB property economist, said building material retailers have been the best performing of the sub-segments of the building sector for more than a year. They should continue to perform well.