Scandal-hit Steinhoff reports $400 mln loss in first half
* Loss from continuing ops at 356 mln euros vs 392 mln euros
* Steinhoff blames knock-on impact of accounting fraud,
fees for losses
* Shares jump more than 14% in Johannesburg
* Sales up 3% on Pepkor Europe and Pepkor Africa
(Adds details, analyst comment, updates shares)
By Nqobile Dludla
JOHANNESBURG, July 12 (Reuters) - South African retailer
Steinhoff reported a 356 million euros ($401 million)
half-year loss from continuing operations on Friday, as the
damage from a massive accounting scandal drags on.
Steinhoff first flagged holes in its accounts in December
2017 -- the warning shot for an accounting fraud since put at
over $7 billion -- shocking investors that had backed its
transformation from a small South African outfit to a discount
furniture retailer spanning four continents.
The owner of Mattress Firm Inc in the United States,
Fantastic chains in Australia and Conforama in France said the
loss from continuing operations came in at 356 million euros in
the six-months ended March compared with a loss of 392 million
euros a year earlier.
Excluding tax, the loss came in at 242 million euros.
"Although corporate and treasury services costs were much
reduced, the operational results for the period continued to
reflect the knock-on impact of the announcement of accounting
irregularities in December 2017," the retailer said in its
97-page half-year unaudited report.
Advisory fees for the period amounted to 82 million euros,
which included 11 million euros for forensic investigation and
technical accounting support, and 30 million euros for creditor
"While every effort is made to limit costs, we expect this
to remain our reality for some time," Steinhoff added.
Steinhoff, which is also listed in Frankfurt, said
net sales from continuing operations increased by 3% to 6.8
billion euros from 6.6 billion euros, with strong contributions
from Pepkor Europe and Pepkor Africa.
Shares in Johannesburg-listed Steinhoff jumped more than 14%
at 1254 GMT and 13.19% in Frankfurt as the market focused on the
operating profit before capital items from continuing operations
figure, which more than doubled to 259 million euros from 101
"Profits are up, turnover is up, they've still got the doors
open, they're still surviving and I suppose that's good news,"
FNB Wealth and Investments Portfolio Manager Wayne McCurrie
McCurrie also added that risk buyers were also pushing the
volatile share price up.
"If you're a trader, you go in there, the share goes up 20%
you're out of there. So I don't think anyone is buying this for
the long term, they're just buying it for the potential trade."
This is the third time this year the retailer has published
its results following the publication of its delayed 2017 and
2018 annual reports in May and June respectively.
The publication of the unaudited half-year report addresses
the company's "disclosure backlog" and brings its financial
reporting back up to date, it said.
HARD WORK WILL 'SHORTLY COME TO FRUITION'
South Africa's biggest corporate scandal has all but wiped
out shareholders' equity and led to several resignations,
including former Chief Executive Markus Jooste, who was
instrumental in putting Steinhoff on investors' radar screens.
It has negotiated and agreed the main terms of a
restructuring deal, under which all its debt would be reinstated
at par and be given a common maturity date of three years from
the completion of the restructuring agreement.
Steinhoff, under new management, said the hard work to clean
up its balance sheet after the fraud "will, in all likelihood,
shortly come to fruition," and stabilize the retailer which also
has operations in Africa.
It added that customer confidence in its offering has
On Friday it said Pepkor Europe was well advanced in
negotiations to refinance its existing term loan facility, which
matures in 2020, with a successful conclusion anticipated in the
second half of this financial year.
The debt of the retailer remains high, with net debt of 9.1
($1 = 0.8885 euros)
($1 = 13.9684 rand)
(Reporting by Nqobile Dludla; Editing by Louise Heavens and
First Published: 2019-07-12 12:36:48
Updated 2019-07-12 15:40:10
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