South Africa’s Shoprite grows profit in the face of dwindling economic fortunes

Africa’s largest food retailer Shoprite Holdings has posted a 8.9 percent rise in half-year profit, thanks to growth from markets like Nigeria and Angola, where the company would have expected to struggle owing to the effects of the slump in oil prices on the oil-based economies.

In Angola, the price of crude as at Friday was 30 percent below the benchmark price used to calculate the country’s 2016 budget. Nigeria’s naira has fallen 134 percent on the parallel market since oil last sold at $114 per barrel in 2014. But these two economies have been able to withstand the difficult situation. Same cannot be said about Shoprite’s home country South Africa where retail has suffered great losses as a result of rising interest rates and higher unemployment.

“The economies of oil-rich Angola and Nigeria showed surprising resilience despite the challenges brought about by the steep drop in the oil price,” Shoprite CEO Whitey Basson said on Tuesday.

Despite import restrictions and forex shortages which has made some foreign companies close shop in Nigeria, Shoprite opened four new supermarkets during the period in review and plans to open four more in the second half of the year. The retailer says it will also reopen the large supermarket in Palanca near Luanda, Angola’s capital city, which burnt down more than a year ago.

The retailer is confident the Nigerian and Angolan markets would continue bringing good returns, citing IMF forecast of 4.1 percent and 3.5 percent growth for Nigeria and Angola respectively in 2016.

Shoprite Holdings has declared an interim dividend of 156 cents (2015: 143 cents) per ordinary share for the period under review. Its shares traded 2.32 percent higher at 14806 ZAC on the Johannesburg Securities Exchange on Tuesday (23 February 2016 11:11).