Pepkor Holdings Limited (PPH) H1 2025 earnings summary

Executive summary

• Revenue grew 12.8% year-over-year to R48.8 billion, with strong trading momentum and market share gains in core retail and fintech segments.

• Normalised HEPS increased 18.9% to 84.3 cents, reflecting disciplined cost management and strategic growth; statutory HEPS up 12.4%.

• Operating profit rose 13.3% to R5.8 billion, with margin improving to 11.9%, just shy of the 12% target.

• Retail remains the core profit driver, though fintech and financial services segments expanded their contributions.

• Robust cash generation (82% cash conversion) and return on net assets of 23.7% on a rolling 12-month basis.

Financial highlights

• Gross profit rose 15.9% to R19.1 billion, with gross margin up 110bps to 39.2%.

• Like-for-like sales up 8.1%, exceeding the 5-6% target.

• Cash conversion at 82% and return on net assets at 23.7% on a rolling 12-month basis.

• Net debt reduced to R10.3 billion, with net debt-to-EBITDA at 0.97x and EBITDA-interest cover at 6.34x.

• No interim dividend declared, maintaining a 3x earnings cover policy.

Outlook and guidance

• Trading momentum continued into H2 FY25, with satisfactory performance in CGM and Lifestyle brands.

• Group plans to open 250–300 new stores in FY25, leveraging strategic growth levers and disciplined cost management.

• Focus on integrating recent acquisitions, notably OK Furniture, pending Competition Tribunal approval.

• Inventory levels expected to normalize by year-end as buffer stock strategy stabilizes.

• Macro environment in South Africa and Brazil remains challenging, but margin benefits to be reinvested into price and value for customers.