· Revenue up 12% to R65bn

· Headline earnings improve 39% to R6bn

· Headline earnings per share increase by 7% to 248 cents

· Net interest-bearing debt reduced 46% to R16bn

· Pepkor transaction approved by shareholders

Steinhoff International, integrated retailer that retails, manufactures and sources furniture and household goods in Europe and Africa announced yet another successful six months' performance for the interim results period ended 31 December 2014.

The Group continues to benefit from the growing demand in the discount and value market segments enabling them to leverage their scale and global supply chain to increase margins.

Steinhoff's revenue increased by 12% to R64.6bn (1H14: R57.8bn) and operating profit grew 16% to R6.8bn (1H14: R5.9bn).

“Our market share gains in all countries where we operate have been very encouraging for the period under review. In what remains a subdued European and African retail market, our discount positioning has underscored a strong set of results,” says Steinhoff International Group CEO Markus Jooste. “In addition, our well-established supply chain consistently provides price advantages reinforced by the group's established property infrastructure and increased scale.”

Turnover earned in currencies other than the rand, as measured in euro, increased to€3.4bn compared to €3.1bn for the same reporting period during 2014.

“Particularly pleasing for us is the group's margin expansion from 10.1% to 10.5%, this is in line with the European strategy to focus on margin enhancement” added Jooste.

Following the overwhelming shareholder support for the acquisition of Pepkor, Jooste confirms that this acquisition will be transformational for Steinhoff.

“Pepkor will significantly improve the group's growth trajectory by enabling Steinhoff to further expand its footprint and product offering in the value discount market.” In addition the group expects that the additional supply chain efficiencies that could result from the acquisition will further protect its ability to supply its customers with quality products at low prices”. The acquisition remains subject to various regulatory approvals, but Steinhoff expects to successfully conclude this transaction before the end of this financial year in June 2015.

Operational review:

The majority of the group's revenues were achieved from Steinhoff's retail activities both internationally and in Africa and these accounted for 74% of total revenues. Manufacturing, sourcing and logistics operations internationally accounted for 24% of revenues, while the properties segment accounted for 2% of group revenues.

International operations

Steinhoff's international operations – which incorporates retail activities in Continental Europe, United Kingdom and Pacific Rim, as well as manufacturing, sourcing and logistics operations in Central and Eastern European regions – performed well with market share gains and margin improvement achieved in most countries of operation.

“Our group procurement initiatives and infrastructure continued to deliver direct benefits to the international retail operations,” says Jooste.

Retail activities

The group's international retail activities increased revenues by 12% to R41.1bn (1H14: R36.7bn) and operating profit grew 17% to R2.7bn (1H14: R2.3bn).

“Steinhoff's European retail operations, which are positioned in the discount segment of the household good market, have once again outperformed the industry as a whole,” continues Jooste. “Over and above our low price positioning, our trusted local brands, and on-going investments in our stores are increasing footfall and trading densities”

In particular, Conforama in France delivered strong revenue growth. “In a market that was down 1%, Conforama increased sales by 3%, confirming the quality of their product range and in-store experience. Importantly the growth in store sales was supplemented by the growing e-commerce market segment which now represents almost 7% of Conforama's sales in France.”

The group continued its investment in its store network during the period. In Switzerland, the group converted three new stores to the Conforama brand, and in Croatia the group will in future trade from four additional stores. Although the store conversions resulted in increased costs in the current period it is expected to contribute handsomely to the Swiss business in the future. The momentum in Spain and Portugal continues to deliver double digit revenue and profit growth. “The success in Spain and Portugal is really encouraging and management's decision to invest in those countries in the midst of the economic uncertainty in these territories some years ago, is now delivering great returns”

Germany remains the largest European market for household goods both in terms of per capita spend and according to market size. This resilient household goods market continues to grow, supporting the group's operations in this territory.

Growing the group's existing bedding market share in Europe remains a focus for Steinhoff. This product category performed well as evidenced by the results of group's bedding retail business in The United Kingdom, being the largest bedding retailer in that market.

Reorganisation and successful new store concepts in the Pacific Rim's retail businesses continue to underpin strong revenue growth.

Manufacturing, Sourcing, Logistics and Corporate Services

This division includes Steinhoff's global supply chain activities which consist of European manufacturing, global sourcing operations, central logistics and corporate income received such as royalties, rebates earned on purchasing volume, treasury and other income.

Steinhoff's Manufacturing, sourcing and logistics operations increased revenue by 7% and operating profit by 8% as a result of improved efficiencies and good cost control initiatives.

“Many of the benefits that are derived by this division are passed onto the internal retail companies that it serves,” says Jooste. “However, we continue to benefit enormously from our central buying power and excellent negotiations for better supplier, shipping and distribution terms.”

European manufacturing was a star performer during this period, primarily due to an improved product mix and larger volumes which improved efficiencies and profitability overall.

Properties

This segment includes the €3.2bn property portfolio mainly located in Europe which is centrally managed by Steinhoff corporate services. This property portfolio yielded a 7.3% return during the period under review. Operating profit grew by 30% to R1.7bn (1H14: R1.3bn) mainly as a result of the rentals now being earned on the kika-Leiner properties which were acquired in June 2014.

African operations

The group's African operations comprise three investments, each independently listed on the JSE. Steinhoff has an 86% interest in JD Group, a 45% shareholding in KAP Industrial Holdings and 18% of PSG Group.

JD Group's continuing retail operations are making good progress to increase market share and profits. JD Group reported revenue growth of 11% to R17bn (1H14: R15.3bn) and operating profit increased by 8% to R351 million compared to the R326 million in the previous comparable period.

Furniture retail grew sales by 8% despite stringent credit granting criteria being applied, and SteinBuild – JD Group's building materials and DIY retail operations - also grew sales supported by a growing market and increased scale of operations. The Automotive segment reported a 15% growth in sales to R9.8bn (1H14: R8.5bn) and operating profit also improved by 15% to R266 million (1H14: R232 million).

Consumer electronics and appliance retail operations experienced challenging tradingconditions as a result of competitive pricing in this segment of the market.

JD Group's shareholders approved the sale of the consumer finance business on 25 February 2015 for R4.7billion, and it is expected that this transaction will conclude soon.

KAP Industrial, the group's associate investment reported a solid set of results increasing revenues by 9% to R8.1bn (1H14: R7.4bn) while operating profit grew from R720 million to R777 million in the period under review.

Outlook

The group is confident about maintaining its current momentum in terms of growth and footprint expansion. “All of our retail businesses are benefitting from the investments made into store networks and our supply chain during the past few years. These investments made our stores more relevant and have solidified our ability to continue to provide our customers with a quality product range at the lowest prices. In addition, Pepkor and its management team are a compelling strategic fit for us, its current product, customer and global footprint are all well aligned to that of Steinhoff, thereby bolstering Steinhoff's existing retail activities and adding more scale to the supply chain and creating accelerated growth potential for the new combined business.” concludes Jooste.

Ends (1464 words)

For more information, contact:

Further information:

Steinhoff International Holdings Limited

Mariza Nel, Director Corporate Services: +27 21 808 0711

Notes to editors:

About Steinhoff International

Steinhoff is an integrated retailer that manufactures, sources and retails furniture and household goods in Europe, Africa and the Australasia.

Our integrated divisions comprise interests in:

· Retail operationsserving the value conscious consumer in Europe, Africa and the Australasia;

· Investment in a quality property portfolio mainly with group entities as tenants.

Steinhoff's strategy continues to prove capable of delivering on stakeholder expectations. The group remains focused on managing the long-term sustainability of its businesses and business practices to maintain and grow the benefits it provide to the group's many stakeholders.

The business model of sourcing and manufacturing products in low-cost locations and retailing them in developed markets haveunderscored the group's growth since listing in 1998. Retail operations arepositioned towards price conscious (value) consumer segments, providing them with affordable household goods products through a vertically integrated supply chain.

Source : Sapa