JSE: SPP Share Price Rebounds Despite SPAR R5 Billion Loss, as Earnings Offer Hope
SPAR’s latest financial update offered a cautiously improved tone, even as deeper structural challenges continued to weigh on long-term...
Quick overview
- SPAR Group PLC's latest financial update indicates a cautiously improved outlook despite ongoing structural challenges.
- The company reported a profit of R1.1 billion from continuing operations, but a significant R6.1 billion loss from discontinued operations led to a headline loss.
- SPAR's share price has fallen nearly 30% year-to-date and remains under pressure, with key moving averages acting as resistance.
- Encouraging signs from FY2025 include stronger margins, improved cash generation, and a healthier balance sheet, but long-term recovery hinges on effective execution.
SPAR’s latest financial update offered a cautiously improved tone, even as deeper structural challenges continued to weigh on long-term sentiment.
A Positive Start to the Week Despite a Complicated Earnings Picture
SPAR Group PLC entered the new week on firmer footing as its share price rebounded more than 2% to close at R104.59, recovering from early weakness following the release of its full-year earnings. The results leaned constructive in several operational areas, although the headline numbers revealed significant challenges that continue to shape investor sentiment.
Earnings Reveal a Split Narrative
For the financial year ended 26 September, SPAR generated R1.1 billion in profit from continuing operations, signaling stability across its core South African and broader African divisions. However, this performance was overshadowed by a steep R6.1 billion loss linked to discontinued operations, primarily its Swiss and UK businesses. This drag pushed the group into a headline loss for the period, with earnings per share plunging from 182.7 cents in FY24 to a loss of 2,507 cents, prompting management to withhold a dividend.
Share Price Trend Remains Under Pressure
Despite today’s bounce, the broader trend through 2025 remains decisively bearish. SPAR’s share price has fallen nearly 30% year-to-date and has more than halved since 2021, when it traded above R200. Technical indicators continue to reflect this weakness, with key moving averages acting as persistent resistance across multiple timeframes. For sentiment to shift meaningfully, buyers will need to drive the price decisively above these levels.
SPAR SSP Group PLC FY2025 Earnings Call – Key Highlights
Financial Performance
- Revenue increased 8% to GBP 3.6 billion, reflecting broad-based strength across regions.
- Operating profit rose 13% to GBP 223 million, supported by improving efficiencies.
- Operating margin expanded by 30 basis points, emphasizing disciplined cost control.
- EPS climbed 25% to 12.5p, driven by stronger profitability and margin gains.
- Free cash flow reached GBP 80 million pre-dividend, marking a shift to improved cash generation.
Balance Sheet & Capital Structure
- Net debt-to-EBITDA reduced to 1.6x, demonstrating continued deleveraging.
- Return on capital employed improved 100 bps to 18.7%, signaling better asset productivit
- Proposed dividend increased 20% to 4.2p per share, reflecting confidence in future earnings power.
- GBP 100 million share buyback launched in October, enhancing shareholder returns.
Operational & Strategic Developments
- Like-for-like sales up 4% in the first two months of FY26, indicating a solid start to the new year.
- Capital expenditure capped at GBP 200 million for FY26 as management prioritizes capital discipline.
- Net contract gains contributed 4% to annual sales growth, strengthening long-term revenue visibility.
- Impairment charges of GBP 117 million, mainly from France and Germany operations.
- GBP 30 million cost reduction program targeting corporate and regional overheads, supporting margin expansion going forward.
Outlook Supported by Operational Progress
Even with these setbacks, SPAR’s FY2025 performance showed encouraging signs: stronger margins, improved cash generation, and a healthier balance sheet. Early FY26 trading data, disciplined investment controls, and the company’s cost-reduction strategy suggest momentum is building beneath the surface. Whether this is enough to reverse the long-term downtrend will depend on execution—and on buyer conviction returning for good.
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