Massmart, the South African retailer in which Wal-Mart Stores owns a 51% stake, has posted higher half-year profits.

The company, which was operating in its first six months under Wal-Mart’s majority ownership, reported a 13.7% rise in headline earnings per share to 416 cents in the 26 weeks to 25 December. Headline earnings increased 21.1% to ZAR895m.

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Excluding costs from integrating Massmart into Wal-Mart and the positive impact of the weak South African rand, headline earnings would have increased 8.7%.

As Massmart reported last month, its revenue was up 15% and comparable-store sales increased 9.2%, with sales up across all formats.

Nevertheless, Massmart’s group gross margin fell from 18.2% to 17% in part due to an increase in promotional sales mix.

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Reflecting on its results, Massmart said: “We are pleased with the trading performance and are confident that the current period of investment will bear fruit in future years.”

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It said sales in the 34 weeks to 19 February were up 15.1%. Comparable-store sales growth remained at 9.2%.

The retailer said sales would continue to grow but it had a note of caution on margins. “The current trends of investment in growth and capacity, including integration costs, will continue through to the end of the year, with sales performing well, but with operating margin under pressure.”