By Claire Badenhorst
- Initially forecasting an 85% profit slump, Absa Group has released its half-year earnings, with an 82% decrease in profits. In a media statement, Absa mentions that it expects a “continued difficult environment” for individuals, mentioning that the financial uncertainty that many are experiencing now is set to worsen investment and trade for the remainder of the year. Still, despite the relatively grim outlook, the Absa Group remains positive, stating that it is well-positioned, with a strong capital and liquidity position, allowing it to continue to support its customers. “In the current economic climate, ensuring continued operational and financial resilience is paramount. We are therefore temporarily holding our growth ambitions in abeyance to focus on cost management and capital and liquidity preservation, while continuing to support customers,” said Daniel Mminele, Absa Group Chief Executive.
- President Cyril Ramaphosa has “strongly reprimanded” Finance Minister Tito Mboweni in connection with a tweet about Zambian President Edgar Lungu’s decision to remove the country’s Central Bank governor. In his statement, President Ramaphosa says the matter has been “addressed to ensure that such an incident does not occur again.” Mboweni retweeted the President’s announcement to his 865,500 Twitter followers.
- Following a fairly turbulent 2020, the Edcon group has announced that it will be selling off parts of Edgars. The buyer, Durban-based Retailability, currently owns a number of brands, including Legit, which it purchased from Edcon four years ago. After the Covid-19 lockdown commenced and economic activity came to a near halt, Edgars collapsed. The sale of the near 100-year old retailer could save many jobs, with the clothing store chain employing around 18,000 permanent staff members. According to Edcon, “the closing of the transaction is targeted for September 2020 and is still subject to various conditions precedent and regulatory approvals, including the Competition Authorities. The parties will now move to work on preparing the signing of the Sale and Purchase Agreements for the Edgars business conducted in the rest of Africa.”
- Old Mutual has released a trading update, ahead of its H1 results which are to be released on the 1st of September. The Cape Town-based insurance company has emphasised the influence that the Covid-19 pandemic and the resultant lockdown has had on the economy, and in turn, their half-year results. The 175-year old company has mentioned that while it expects the effects of the lockdown to continue impacting their business and clients, the company will “remain cautiously optimistic that the easing of lockdowns everywhere will be positive for us”, according to CEO Iain Williamson. According to Bloomberg, “The insurer will post a net per-share loss of between R1,29 and R1,54  for the six months through June, compared with a year-earlier profit of R1,27.”
- De Beers has slashed the prices of its diamonds in an attempt to restart sales, after the Covid-19 pandemic froze the industry. According to a source familiar with the situation, the world’s number one producer told customers that it is cutting prices for larger stones by almost 10% at its sale starting this week. Anglo American and Russian rival Alrosa, had previously tried to defend the value of the gems as the pandemic hammered the sector. With jewellery stores closed, cutters and polishers stuck at home, and global travel at a standstill, the entire diamond industry ground to a halt. “De Beers lowered the price of rough diamonds bigger than 1 carat, a size that would normally yield a polished gem of about 0.3 carat in size,” the source said. The company held the price of smaller stones as there is very little demand for them and lowering prices by a similar amount would be unlikely to spur demand. Prior to the price cut, De Beers had made major exceptions to their regular sales rules “allowing customers to back out of contracts and view diamonds in alternative locations. Still, smaller rivals were selling at a 25% discount, eating into the company’s market share.” De Beers declined to comment.
