Weakening currencies, product inflation and tougher trading conditions conspired to negatively impact on Furnmart’s half year results, the group said in statement on Thursday. To this effect, Furnmart says this has impacted on revenue, trading results, and the valuation of the group’s intercompany receivables and investments. For the period, Furnmart’s revenue was P622.2 million, 5 percent down from the previous year. Operating income at P75.1 million was 1.3 percent lower than the prior year. In a statement co-signed by the group chairman and Managing Director, John Mynhardt and Tobias Mynhardt, the group’s gross profit margins were maintained despite difficult trading conditions, higher product inflation and currency weakness.
The group says despite all challenges, it was able to keep operating expenses in line with that of the previous year and the quality of the debtors’ books on the whole was kept the same. As a result, Furnmart management retained impairment provisions at the same at all levels. The South African credit environment however is said to remain a challenge. Higher depreciation charges are blamed on new store openings and upgrading of existing stores. Furnmart opened five new stores during the period under review. The exchange loss of P45.2 million is believed to compare to an exchange profit of P3.9 million in the previous year. The exchange loss, according to the company directors, was caused by the weakening of the Group’s other functional currencies during the period under review.
“As a result, the profit before tax of P6.2m is 89.3% lower than the previous year. However, if constant exchange rates were to be used to consolidate these results, the profit before tax would have been 7.5% below last year,” reads the statement. This is understood to buttress the material impact that the weakening currencies has had on the results. The management says the Zambian business unit remains a challenge due to the material weakening of the Zambian Kwacha and has led to the group trading cautiously in this market.
In addition to the Furnmart stores, Furnmart Holdings further owns Home Corp furniture shops in the region, including in Botswana and South Africa. The group, however, says the Home Corp model in South Africa requires refinement. Looking forward, the group leadership expects the current trading conditions to remain in place for the remainder of the 2016 financial period as consumers come under pressure from rising inflation, slow economic growth, job losses and interest rates increases.