Pick n Pay Stores says net profit rose by about a fifth in the financial year to March 3, even as its operations outside SA stumbled.

“The group’s improved performance is anchored by strong performances from its stores serving the growing lower to middle income communities of SA, a more competitive price position and a substantively improved fresh offer,” it said.

Profit after tax was R1.65bn in the 53-week period, versus R1.3bn in the prior 52-weeks. On a pro-forma basis, net profit was up 19.9% as turnover grew 7.1% and margins improved.

A final dividend of 192c a share brings the total annual dividend to 231.1c per share, a 22.4% increase.

Despite the upbeat financial report, Pick n Pay’s shares were 2.8% lower at R69.74 at 10.25am on Friday.

The group, led by former Tesco UK boss Richard Brasher since 2013, said the performance of the SA business – which trades under the Pick n Pay and Boxer brands – “mitigated some operating challenges experienced outside its borders”.

In its home market, turnover grew 7.4% and profit before tax was up 23.8%. 

But earnings from the rest of Africa fell 16.2%, “reflecting difficult economic conditions in Zambia and the once-off impact of currency devaluation in Zimbabwe”.

Thanks in part to promotions, Pick n Pay said selling prices were reduced by 0.3% in the year, while group-wide volume growth of 5.1% “represented its strongest underlying trading performance for many years”.

“Market-leading turnover growth was achieved without sacrificing earnings growth,” it said.

The group added 110 net new stores in the period, while 103 stores were refurbished.

Value-added-services income, including from the group’s partnership with TymeBank, was up 41.5%.

Meanwhile, Pick n Pay said it had started building a store in Nigeria, which would open in 2019, and it planned to open two more in that market.

“Over the past six years we have changed the trajectory of Pick n Pay,” Brasher said. “This has been a very good year.”

He said Pick n Pay would invest R2bn in the business in the financial year ahead, compared to R1.5bn in the 53 weeks to March 3.

It planned to invest behind the Boxer business – which “can easily double in size” – in store refurbishments, and in the Pick n Pay Express chain.

While the group would probably open more than 100 stores in the coming year, the industry’s store-growth race “has moderated”.

Brasher said the grocery industry in SA was not yet efficient enough and food prices remained too high.