Steinhoff's profits up 36% to R5bn

This translatd into a 5% rise in headline earnings per share to 173.4c for the six months to December‚ from 165.8c in the similar period a year ago.

"Our enlarged business in Europe is certainly producing benefits and this‚ coupled with continued investments in infrastructure has helped to improve margins for the group overall. As 90% of our operating profit is generated in cash‚ we have now reached the target we set out for ourselves during the start of the financial crisis‚" said Steinhoff's chief executive Markus Jooste.

The company said its African operations delivered a "solid" performance.

"We expect our recent investments in technology and infrastructure to result in greater efficiencies to support sustainable margins of the retail business in Africa‚" said Jooste. Steinhoff's African operations now consist of two independently listed companies‚ KAP Industrial Holdings Limited (KAP) in which Steinhoff owns 62% and JD Group in which it owns 56%.

The African operations include an associate holding through a 20% investment in the PSG Group.

Despite subdued consumer spending in Europe and the Pacific Rim‚ the European retail operations reported a 3% increase in revenues and an 11% growth in operating profit to R1.6bn.

On future prospects‚ Steinhoff said it continued to increase its market share across Europe. In terms of African operations‚ the industrial businesses of KAP can "expect to benefit from infrastructure growth both within southern Africa and from other African countries".

"Our integrated global business strategy and diversity in our earnings continues to protect the group against any prolonged downturn in any one market in which we operate" said Jooste.