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UPDATE 1-South Africa's Steinhoff reports rise in H1 profit, revenue
June 7, 2017 / 8:52 AM / 6 months ago

UPDATE 1-South Africa's Steinhoff reports rise in H1 profit, revenue

(Adds Poundland performance, U.S. mattress deals, share price)

JOHANNESBURG, June 7 (Reuters) - South Africa-based retail group Steinhoff International reported a 13 percent rise in half-year operating profit and a 48 percent jump in revenue as recent acquisitions buoyed sales.

Steinhoff, which bought U.S.-based Mattress Firm and Britain’s Poundland last year, said operating profit rose to 903 million euros ($1.02 billion) in the six months to the end of March, up from 797 million euros a year earlier.

But diluted sustainable earnings per share (EPS) slipped 6 percent to 15.50 euro cents after the firm issued shares to finance the acquisitions, so issued shares rose 15 percent.

Steinhoff’s Johannesburg-listed shares dipped 2.8 percent to 67.53 rand by 0811 GMT, while its Frankfurt-listed shares fell 3.5 percent.

“Excluding the recent strategic acquisitions, the company’s retail business achieved total organic revenue of 7.2 billion euros amidst volatile markets and currencies, translating to 9 percent organic growth,” Steinhoff said in a statement.

The South African group, which moved its primary listing to Frankfurt in 2015, focuses on thrifty furniture shoppers in developed markets such as Europe and the United States. It also sells clothing and mobile phone airtime in Africa.

Geographical and product diversification in a resilient discount market led to solid revenue and operating margins, Chief Executive Markus Jooste said.

U.S. bedding retail unit Mattress Firm, with 1,400 rebranded Sleepy’s and Sleep Train stores, contributed 1.5 billion euros to revenue.

Steinhoff, after phasing out Tempur-Sealy brands at its Mattress Firm stores, bought supplier Sherwood Bedding and announced a partnership with manufacturer Serta Simmons.

“Although this creates short term disruption in our business we remain confident that, strategically, this is the best long term strategy for the business in the USA,” Steinhoff said.

In Britain, discount chain Poundland was performing better than expected, recording positive like-for-like growth for the first time since December 2014, the company said.

Steinhoff, after withdrawing from a plan to merge its African assets with grocer Shoprite, last month said it planned to list its African businesses separately on the Johannesburg Securities Exchange.

$1 = 0.8876 euros Reporting by TJ Strydom; Editing by Jason Neely and Edmund Blair

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