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(Bloomberg) —Â Massmart Holdings Ltd., the South African food and general goods retailer controlled by Wal-Mart Stores Inc., cut its full-year dividend by 39 percent and said the outlook for consumers has weakened amid rising interest rates and inflation.
The retailer cut the total dividend to 2.58 rand a share from 4.21 rand to invest in African expansion and properties, the Johannesburg-based company said in a statement on Thursday. Operating profit rose 14 percent to 2.3 billion rand ($147 million) in the year through December.
“Unfortunately the outlook has weakened considerably and we anticipate further negative pressures, including poor economic growth, higher inflation from the weaker rand, and higher interest rates,” Chief Executive Officer Guy Hayward said in the statement. “As with most local retailers, Massmart’s sales growth slowed in the latter period to December 2015.”
South African retailers and consumers are under pressure as the country’s worst drought in more than a century pushes prices higher, with December food inflation climbing to 5.8 percent. Meanwhile, a weakening rand prompted the central bank to raise interest rates by half a percentage point last month, increasing repayment costs for those with loans or mortgages.
Massmart sales climbed 8.4 percent to 84.7 billion rand in the 52 weeks ended Dec. 27. Sales for the subsequent eight weeks through Feb. 21 climbed 8.9 percent. The stock climbed 0.3 percent on Wednesday, paring the decline this year to 1 percent.
