This article first appeared on GuruFocus .
Release Date: December 08, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Spar Group Ltd ( JSE:SPP ) reported a 1.6% increase in group turnover to 132.4 billion rand, with operating profit improving by 2.3%.
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The company achieved a significant reduction in net borrowings by 40%, demonstrating strong cash generation and financial discipline.
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Spar Group Ltd ( JSE:SPP ) successfully exited non-core geographies, including Poland and Switzerland, which were not aligned with their investment thesis.
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The company saw strong growth in its digital and omni-channel platforms, with a 136% increase in total order volumes year on year.
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Spar Group Ltd ( JSE:SPP ) maintained a healthy gross profit mix in its liquor segment, with retail revenue increasing by 3.8%.
Negative Points
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The company's headline earnings per share (HEPS) declined due to higher financing costs and a higher effective tax rate.
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Spar Group Ltd ( JSE:SPP ) faced challenges in achieving its targeted operating margin in South Africa, ending at 1.7% versus the previously guided 2.1% to 2.3% range.
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The company incurred significant impairments, totaling 5.2 billion rand, impacting its financial results.
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Spar Group Ltd ( JSE:SPP ) experienced a decline in retailer loyalty by approximately 60 basis points over the full year.
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The KZN distribution center is still less than halfway to achieving normal profitability, indicating ongoing operational challenges.
Q & A Highlights
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Q: Risa, we noticed we didn't see any EBITDA numbers. Can you maybe give us an overview of EBITDA for the 2025 year? A: Thank you, Ziele. The total group EBITDA was about 33 billion rand. In terms of continuing operations, South Africa was 1.8 billion rand, and Ireland delivered 62 million euros of EBITDA. Ireland includes the EBITDA losses from AWG though.
Q: Can you clarify the sequence of capital allocation? Is the first step likely to be buybacks, dividends, or a combination, and what determines that order? A: We have hinted at returns to shareholders over the short to medium term. Our gearing position and the improvement in our gearing positions demonstrate that we can achieve that. Currently, our share price is substantially undervalued. The usual sequence would be to recommence dividends, but in our case, buying back shares might be the best way to create value for shareholders before committing to a long-term dividend policy.
Q: Can you provide some color on post-period trade in South Africa and BWG? And what inflation are you seeing? A: We've had fairly positive post-period trade. October was weaker than we'd like, but November has been exceptionally strong. Over the three months, positive, broadly in line, probably slightly ahead of H2. For inflation, in South Africa, we've seen lower inflation in the last few months, with the inflation number at 3.5% for the year, but substantially below that in September and October.
Q: In Spar SA, what are the upward pressures on costs that we could potentially see in FY 26? A: From a cost perspective, we are investing in initiatives to transform the business. Our SAP operating expenses will ramp up, peaking in 2026. We are focused on getting to the 3% operating margin, which spans growth, cost reduction, and operational efficiencies.
Q: How much of the net debt improvement was aided by working capital cutoff support? Without the cutoff support, could you tell us how much net debt would have been? A: The working capital position improved substantially, with the earlier cutoff contributing about 800 million to a billion rand. However, 2.3 billion of non-operating cash flows left the business with the disposal of Poland and Switzerland. These factors should be considered together when looking at the net gearing position.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
