Cashbuild’s (CSB) topline improved, albeit from a low base in the prior year, but profitability was hampered by increased competition and higher input costs. The Cashbuild SA segment benefited from the continued rollout of small-model stores (SMS) with CSB managing to grow the group’s store base by net four stores to 322. Revenue was also higher than the group level for this segment, but CSB traded GPM to protect margins in key product categories.
P&L Hardware is still not profitable, but the negative trend is slowing, with the topline only marginally down in FY24. The impairments to goodwill that occurred in 1H24 weighed on margins once again, but if we exclude the impairments, 2H24 was profitable for this business. Management aims to break even in this business in FY25. CSB will also continue to convert P&L stores to Cashbuild, with a third of P&L stores viable for conversion. We believe that means approximately 16 more conversions may take place, with four planned for FY25.
The Common Area (Namibia, Lesotho and eSwatini) was able to grow its topline, but GPM slipped in this segment due to a flat gross profit. The performance of the Common Area was similar to that of Cashbuild SA, given these countries’ reliance on South Africa.
The underperforming segment was the Non-Common Area (Botswana and Malawi), where the devaluation of the Malawian kwacha significantly impacted topline and margins. We do not expect CSB to expand in this segment, given they exited Zambia in the prior year. Consolidation could occur in this market given how competitive the operating environment is.