Rolling power cuts weigh on Pick n Pay

South Africa's second-largest retail group, Pick n Pay, has released its latest financial results, shedding light on the impact of the ongoing power crisis in the country. Despite facing challenges, such as load shedding and rising costs, the company has managed to grow its revenue by 8.9 percent. However, the earnings per share have taken a hit, with a decrease of 3.9 percent, and the headline earnings per share down by 1.3 percent. The CEO of Pick n Pay, Pieter Boone, discussed the strategies implemented to navigate through these difficult times. Boone highlighted the 'Eko Zeni' strategy introduced last year, which has shown positive results despite the challenges presented by load shedding. He mentioned that if not for the power cuts, the company's profit before tax would have increased by 7 percent. However, the impact of load shedding resulted in an additional cost of 430 million rand over the 12-month period, mainly due to increased diesel expenses and supply chain disruptions. Boone expressed concerns about the future energy stability in the country, especially as South Africa faces the possibility of stage eight load shedding. He emphasized the ripple effect of power cuts on various industries, including food production and retail. The CEO urged the government to take decisive action to address the energy crisis, as it not only affects businesses like Pick n Pay but also impacts the entire society and citizens of South Africa. One of the pressing issues discussed was the government's investigation into food prices and retailers' profitability during the crisis. Boone acknowledged the cooperation with the competition commission but highlighted that the burden of high food inflation and energy costs should not be shifted entirely to retailers. Despite efforts to contain costs, the company faces challenges in maintaining margins and ensuring the availability of essential goods for consumers, especially as the winter season approaches. Boone also touched upon the fuel rebate issue, where retailers like Pick n Pay are excluded from certain government exemptions, leading to increased costs passed on to consumers. He emphasized the importance of inclusivity in such measures, particularly in a struggling economy. Looking ahead, Boone outlined the progress of the 'Air Kuseni' strategy and the resilience efforts undertaken by Pick n Pay to secure its future in a volatile environment. The CEO highlighted the success of growth engines like Boxer and clothing segments, which have shown promising results. With plans to open more stores and enhance customer offerings, Pick n Pay aims to continue its growth trajectory despite the challenges posed by the energy crisis. In conclusion, Boone reiterated the company's commitment to navigating through the uncertainty while striving to provide quality services to its customers and contribute positively to the communities it serves.