Leading furniture retail group, Furnmart Limited has announced that profits for the twelve months period to January 2017 will be more, despite reduced disposable income and poor economy.
In a statement released recently, Furnmart Managing Director, Daniel le Roux highlighted that Profit After Tax(PAT) is expected to be higher than last year. However, the BSE listed group has not disclosed why bottom line is up. “The board of directors of the company would like to bring to the attention of shareholders that the company’s profit after tax for the period ended 31 January 2018 is expected to be significantly higher than that for the corresponding period ended 31 January 2017,” said the company.
Shareholders have been advised to exercise caution when dealing in ordinary shares of Furnmart Limited, until a full announcement of the results is made,” reads the statement. In the same period last year the group experienced subdued trading conditions due to closure of some of its operations. The group recorded 25.8 percent decline in operating income to P55.8 million is which was also attributed to the winding down of the Zambian operations, higher operating expenses and lower finance income earned, partially offset by a decrease in debtors’ costs. The group said its revenue of P624 million for the period was only marginally higher compared to the previous year.
For its full year ended July 2017, the group recorded marginal decrease in revenue of P1.17 billion compared to P1.18 billion recorded in the prior year. Commenting on the results, the Group Chairman, Tobias Mynhardt explained that excluding the discontinued operations, revenue increased, compared to the prior year. “Gross profit margins were lower than last year, mainly due to the closing down of sale operations and a very competitive, subdued trading environment elsewhere,” said Mynhardt.
He said the group’s businesses in the chosen markets and territories are well positioned to take advantage of the inevitable improvement in market conditions. “Our focused management teams will continue to seek growth opportunities in the region. Management will continue with moderate new store growth, primarily in South Africa,” said Mynhardt.
The company stated that the difficult trading environment was brought about by low economic growth, increased competition and high levels of consumer debt in the region. Profit after tax increased by 35 percent to P64.5 million compared to P47.7 million recorded in 2016. Operating income declined by 5.6 percent to P130.2 million due to the closing down of Zambia shops, higher operating expenses and lower finance income earned. During the year the group opened four new Furnmart stores and it is now trading out of 120 stores in three countries, Botswana, South Africa and Namibia.