The SPAR Group (SPP) H2 2025 earnings summary

Executive summary

• Focused on core distribution, retailer enablement, and simplifying the portfolio, with strategic exits from Poland, Switzerland, and UK/AWG to strengthen the balance sheet and reduce complexity.

• Group turnover rose 1.6% to R132.4bn, operating profit up 2.3% to R2.8bn, and free cash flow increased 13.4% to R5.5bn, reflecting disciplined execution and cost management.

• Debt reduced by 40%, gearing at 1.74x, and significant impairments (ZAR 5.2bn) taken to clean up the balance sheet.

• Loyalty and digital adoption improved, with strong omnichannel growth and new digital platforms scaling rapidly.

• Strategic roadmap targets a 3% operating margin in Southern Africa by 2028, with disciplined execution and capital allocation.

Financial highlights

• Group turnover increased by 1.6% to R132.4bn; operating profit rose 2.3% to R2.78bn, maintaining a 2.1% margin.

• Turnover from continuing operations up 1.8% in constant currency; H2 growth at 2.6%.

• SA operating profit up 6.8% (8.8% in H2); Ireland operating margin at 3.3%.

• Group EBITDA at ZAR 3bn; SA ZAR 1.78bn; Ireland EUR 62m (including UK losses).

• HEPS declined 8.9% to 795.8 cents due to higher finance costs and tax; ROCE improved to 14.4%.

Outlook and guidance

• Path to 3% SA operating margin by 2028, with a glide path of ~2% in 2026 and 2.5% in 2027.

• Strategic goals for 2030 include retailer loyalty above 80%, retailer profitability over 3.5%, and 3% SA operating profit margin.

• CapEx to increase in 2026–2028, peaking with SAP rollout, then normalizing post-2028.

• Share buybacks prioritized over dividends in the short term due to perceived undervaluation.

• Working capital cycle expected to remain neutral; no further major impairments anticipated.