Booker eyes expansion in India

Booker is targeting expansion in India as the UK’s leading cash and carry wholesaler to corner shops, convenience stores and caterers lifted pre-tax profit 21 per cent in the year to March 26.

Booker opened its first branch in India in September, in northern Mumbai, serving the independent, or kirana, stores and caterers.

Charles Wilson, chief executive, said the group planned to open another wholly owned branch in Mumbai this financial year. It also plans to open an outlet in another city with a local partner.

“What we are hoping is to continue expanding in Mumbai with another branch, and opening in other cities with local partners,” he said.

Booker is aiming for 15 outlets with local partners by 2013. “[India] is a very complex market and a great market to be in,” said Mr Wilson.

The comments came as Booker lifted pre-tax profit from £47.2m to £57.2m, reflecting improved sales and tight cost management.

Sales rose 6.5 per cent to £3.39bn ($4.9bn), while like-for-like sales advanced by the same amount.

Mr Wilson said sales had been helped by developing Booker’s business with caterers, with like-for-like sales up 9.1 per cent in a contracting market. It is now generating overall sales of £1bn to caterers. Like-for-like sales to independent retailers expanded 5.3 per cent, helped by higher sales at Booker’s franchised convenience store business. Tobacco sales were boosted by price inflation in this market.

Booker also strengthened its balance sheet, moving from net debt of £24.9m to net cash of £7m.

However, the group remained cautious on the outlook, with the economy expected to remain difficult and continued competition in the wholesale food market.

The period of “2010-11 is expected to be challenging, but we will do a good job of serving our community of small businesses in these conditions, and continue to increase market share,” said Mr Wilson.

A proposed final dividend of 1.03p makes a total of 1.27p (0.87p), payable from earnings per share of 3.19p (2.63p).

The shares rose 1.15p to 40.35p.

• FT Comment

Booker’s recovery continues, with good progress in challenging markets. With a pre-tax profits forecast of £61m for the current year, the shares trade on a forward p/e of just over 12, a discount to the sector. While the economic outlook is uncertain, this valuation looks undemanding, particularly given the medium-term prospects in India.