Scandal-hit Steinhoff says will suffer more in 2019

  • In Business
  • 2019-06-19 17:15:36Z
  • By By Nqobile Dludla
Scandal-hit Steinhoff says will suffer more in 2019
Scandal-hit Steinhoff says will suffer more in 2019  

By Nqobile Dludla

JOHANNESBURG (Reuters) - Steinhoff International warned of the lingering damage from a massive accounting scandal after the South African retail group reported a 1.2 billion euro ($1.3 billion) annual loss, sending its volatile shares down 8 percent.

Steinhoff first flagged holes in its accounts in December 2017 -- the warning shot for an accounting fraud since put at over $7 billion -- shocking investors that had backed its transformation from a small South African outfit to discount furniture retailer straddling four continents.

While it reduced losses by 70 percent compared to the 4 billion euro figure in 2017, Steinhoff warned that the reputational damage it had suffered and advisor and professional fees would weigh on its performance this year.

These would compound a number of other factors dragging on net sales, including asset disposals, a weaker global economy and increased competition, its CEO Louis du Preez said in message from management in the 328-page 2018 annual report posted on its website.

"The company and group continue to work hard to recover from the consequences of the announcement of 5 December 2017," the message added.

Shares in Steinhoff, which owns Mattress Firm in the U.S., Fantastic chains in Australia and Conforama in France, fell 8 percent in Johannesburg on Wednesday morning after the news, but had recovered to 1.42 rand per share by 0920 - a 5.3% decline.

In Frankfurt, where it has a secondary listing, its shares fell more than 10 percent but have since regained some ground.


Steinhoff, under new management and working to clean up its balance sheet after the fraud, blamed one-off expenses including professional fees of 117 million euros and impairments for its 2018 loss.

The consequences of the scandal had a "severely negative" impact on its results, the annual report said.

The retailer had to repeatedly delay the release of its results for 2017 and 2018 as it waited for the outcome of an investigation by auditor PwC into the scandal and for audits from external auditor Deloitte, which kept missing deadlines due to the complexity of the fraud.

PwC's probe found eight people, including former Steinhoff executives, were involved in a scheme where potential intercompany transactions worth 6.5 billion euros were fraudulently recorded as external income to prop up profits and hide costs in money-losing subsidiaries.

In the 2018 reporting period, Steinhoff said sales were affected by asset disposals to shore up liquidity as well as tough trading conditions, with revenue from continuing operations up 3% to 12.8 billion euros.

Asset disposals include a majority stake in a South African auto dealership unit, Conforama's 17% stake in online fashion retailer, Steinhoff's 13.5% stake in investment firm PSG Group, a 43% stake in KAP Industrial as well as property in Austria.

Its 2019 half-year results are scheduled for release on July 12. Net finance costs are expected to be higher than in 2018 as fees related to the probe and restructuring effort inflate expenses for another year.

($1 = 0.8929 euros)

(Reporting by Nqobile Dludla; Additional reporting by Emma Rumney; Editing by Chris Reese, Grant McCool and Keith Weir)


More Related News

Putin signals Russia
Putin signals Russia's return to Africa with summit

President Vladimir Putin hosts dozens of African leaders next week as Russia seeks to reassert its influence on the continent and beyond. The heads of some 35 African countries are expected for the first Africa-Russia Summit in the Black Sea resort of Sochi next Wednesday and Thursday. For Putin, the summit is a chance to revive Soviet-era relationships and build new alliances, bolstering Moscow's global clout in the face of confrontation with the West.

Foreigners in S.Africa appeal to be relocated after attacks
Foreigners in S.Africa appeal to be relocated after attacks
  • World
  • 2019-10-16 17:08:48Z

Hundreds of foreign nationals on Wednesday took to the streets of Cape Town, demanding to be relocated from South Africa after camping at the UN refugee agency offices for a week. The foreigners, many of whom described themselves as asylum-seekers, say they no longer feel safe in South Africa after a surge of xenophobic attacks last month. Many of the protesters have been camping at the offices of the United Nations High Commissioner for Refugees (UNHCR) in Cape Town since October 9, vowing not to leave the premises until the agency addressed their concerns.

Ex-Mozambique finance minister fights extradition to US
Ex-Mozambique finance minister fights extradition to US

Former Mozambican finance minister Manuel Chang is challenging attempts to extradite him to the United States for a corruption trial related to a $2 billion debt scandal that rocked his country's economy. At his extradition hearing Wednesday in neighboring South Africa, Mozambique's government argued that he should be returned home instead. Chang was arrested in South Africa last year on the request of the U.S. government, as the scandal affected some U.S. investors.

Botswana Sees Trade With U.K. Continuing Unhindered After Brexit
Botswana Sees Trade With U.K. Continuing Unhindered After Brexit
  • World
  • 2019-10-16 13:11:33Z

(Bloomberg) -- Botswana, the world's second-biggest diamond producer, expects its trade with the U.K. to continue unhindered after Brexit.The Southern African Customs Union, which comprises Botswana, South Africa, Lesotho, Namibia and Eswatini, along with Mozambique last month agreed on a deal with the U.K. to govern trade should it leave the European Union at the end of the month. The deal mirrors the terms SACU currently has with the EU."We have worked quite hard on ensuring there is no trade disruption," Botswana's Investment, Trade and Industry Minister Joy Kenewendo, who traveled to London last week to chair talks on concluding the accord, said in a phone interview from Gaborone, the...

Rugby World Cup 2019 latest odds - who are the the favourites in the quarter-finals?
Rugby World Cup 2019 latest odds - who are the the favourites in the quarter-finals?

With the 2019 Rugby World Cup hurtling towards the knockout stages, Telegraph Sport takes a look at how the contenders are shaping up with the bookmakers. Despite a more temperate year by their own standards, New Zealand still possess ample class, and count some of the world's very best performers among their squad. The pool stage win against South Africa will have settled any pre-tournament doubts, despite giving them a tougher route through the knockout stages.

Leave a Comment

Your email address will not be published. Required fields are marked with *

Cancel reply


Top News: Business

Hit "Like"
Don't miss any important news
Thanks, you don't need to show me this anymore.