For the 52 weeks to June 2012, Massmart’s total sales increased by 15.6%, operating profit by 21.0% and headline earnings by 38.0%. Excluding costs relating to the Walmart integration and transaction however, operating profit increased by 3.7% and headline earnings by 8.9%.

The underlying trading was resilient with comparable sales increasing by 9.6% and product inflation remained low at 1.8%. The derived 7.8% increase in comparable sales volumes was material and put pressure on operating costs, the impact of which was somewhat mitigated by supply chain efficiencies.

Although the Rand weakened against the Dollar during the financial year, the Group incurred a foreign exchange translation loss on its African businesses of R72.5 million due to the unrealised translation loss caused by the significant currency devaluation in Malawi in May 2012.

Underlying cost pressures remain a challenge. The Group’s significant investment in new stores, the Food Retail conversions, and the new Regional Distribution Centres (RDCs) caused both occupancy costs and depreciation to increase ahead of sales growth. A secondary effect is the above-inflation increases in Local Government taxes and services. Buoyed by a good working capital performance, cash generated by operations increased by 62.8% to R2.7 billion, financing a record R1.7 billion in capital spending on maintaining and growing operations and acquisitions.