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S.Africa’s SPAR sees Polish business breaking even in 24 months

* Normalised HEPS down 13.4%

* Polish business undergoing restructuring

* SPAR declares lower interim dividend vs prior yr (Recasts throughout with Poland comment from presentation)

By Nqobile Dludla

JOHANNESBURG, May 21 (Reuters) – South Africa’s SPAR Group expects its Polish business to break even in the next 24 months and deliver 160 million euros ($175.1 million) of full-year turnover, after losses there weighed on half-year earnings.

The grocery chain and wholesaler has been expanding in Europe to offset weaker consumer spending at home. It completed the acquisition of a controlling stake in Polish deli and supermarket chain Piotr i Pawel group in October.

Group Chief Executive Graham O’Connor told analysts during a results presentation that he expected that business to deliver turnover growth of 280 million euros in the 2021 financial year, 350 million in 2022 and 400 million euros in 2023.

“The Polish economy is one of the most sustainable economies within the EU. But in an extremely competitive market we do believe there is an opportunity for specialist fresh supermarket and convenience offering,” he said.

O’Connor said Piotr i Pawel’s “business rescue” status, a form of bankruptcy protection, was nearing completion after setbacks due to the temporary closure of courts in Poland due to the novel coronavirus pandemic.

In the four weeks ended April, SPAR’s southern African business saw sales fall as much as 14% due to the closure of its liquor and Build It stores because of coronavirus restrictions. Those businesses contribute 20%-25% to Southern Africa sales.

Its Swiss business was the only star performer during that period, benefiting from consumers favouring convenience stores over big supermarkets.

Overall in the six-months ended March 30, normalised headline earnings fell to 452.7 cents from 522.5 cents last year, hit by losses at the Polish business.

SPAR declared an interim dividend of 200 cents per share, 29.6% lower than the previous year, and said it would consider the annual dividend at year-end when there is more clarity on the pandemic’s impact.

($1 = 17.9803 rand)

($1 = 0.9136 euros) (Reporting by Nqobile Dludla; Editing by Sherry Jacob-Phillips and Emelia Sithole-Matarise)

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