Cashbuild FY revenue edges lower

JSE-listed building materials and retailer, Cashbuild, has reported a 4 per cent drop in revenue, accompanied by a 38 per cent slump in headline earnings. Werner de Jager, Chief Executive of Cashbuild, attributes this decline to the tough operating environment caused by constrained consumers who are buying less cement and timber. De Jager elaborated on the challenges faced by the company during a recent interview on CNBC Africa. The decline in revenue, coupled with gross margins under pressure and increasing costs, all contributed to a negative impact on Cashbuild's bottom line. De Jager highlighted that the past year has been particularly challenging for the business due to economic constraints on consumers resulting from reduced spending. In response to these difficulties, Cashbuild is implementing strategies to drive sales volume growth. The company has opened three new stores since the previous financial year and plans to aggressively expand its market presence to reach untapped regions. However, De Jager acknowledged that operating in the current environment is challenging as numerous projects are being put on hold due to various factors such as service availability for shopping center developments and electricity shortages. Cashbuild is also facing inflation pressures, with the inflation figure for its product basket exceeding 5 percent, although slightly lower than the national inflation rate. De Jager expressed concerns about the uncertainty surrounding future inflation trends, particularly with potential fuel price increases on the horizon. Despite efforts to pass on increased costs to customers, Cashbuild experienced a contraction in gross profit percentage, indicating a challenge in fully offsetting rising expenses. However, De Jager reassured that the contraction is not a major concern as the company's gross profit levels have returned to pre-COVID levels. Cashbuild has also been grappling with the energy crisis in South Africa, investing in backup power systems at its sites and stores to mitigate the impact of load shedding on operations. The company has seen a significant increase in its diesel bill, attributing it to the necessity of alternative power sources. Looking ahead, Cashbuild's focus will remain on store development, despite uncertainties surrounding next year's elections and civil unrest in some trading areas. De Jager emphasized the importance of staying competitive and prioritizing customer service amidst challenging market conditions. In conclusion, De Jager described the current economic landscape in South Africa as tough, particularly for consumers in Cashbuild's market sector who are disproportionately affected by food and transport inflation. With challenging times ahead, Cashbuild remains committed to navigating the difficulties and serving its customers to the best of its ability.