A Macroeconomic overview
SPAR delivered satisfying results considering the very different territories and supply chains we manage. The diversity of the group has proven to be our strength, and applies to people, offerings, formats and relationships.
In South Africa, the technical recession in combination with factors highlighted in the Chairman’s report, dampened consumer spending power. A downward trend in food inflation was offset by higher fuel prices and the VAT increase.
Ireland is predicted to deliver the highest GDP growth in the EU in 2018 – this despite continued uncertainty about the impact of Brexit. Following the refinancing of BWG Group’s debt, we are in a strong position to exploit attractive opportunities in this market.
The weak domestic economy in Switzerland is gradually improving. Low unemployment and minimal economic and trade barriers between the European Union and Switzerland resulted in a highly competitive food retail sector, characterised by cross-border shopping and high wages.
Growth through acquisitions and new investments
The details of our recent acquisitions are set out in the investment case and relate mostly to developments in Ireland.
In the past year BWG Group acquired 4 Aces, which expanded our supply capacity and reach in Ireland. In September, BWG announced the acquisition of Corrib Food Products, a supplier of fresh and frozen poultry and other frozen foods to customers in Ireland.
Income from S Buys, the pharmaceutical wholesale business acquired in 2017, was included in our results for the first time. The strategic investment has provided momentum for growth in the Pharmacy at SPAR brand. S Buys achieved strong results despite lower-than-expected government-regulated price increases. More detail about the business and our long-term opportunity is provided in the case study on S Buys.
The opening of our first SPAR supermarket in Colombo, Sri Lanka, in partnership with Ceylon Biscuits Ltd in April 2018 was successful. An additional store will open in January 2019 with a further three corporate stores set to open in 2019.