Imperial forecasts full-year profit will ease back

Imperial Holdings said in a voluntary trading update on Monday that headline earnings per share for the year to June 2017 were likely to be 11%-14% down.

It said its latest forecasts showed a marginal increase in revenue and operating profit, ahead of the guidance given a year ago.

“Earnings per share, headline earnings per share and core earnings per share … are expected to decrease on the previously reported corresponding period,” it said in an announcement to shareholders. The logistics and vehicle distribution and financing group told Business Day it did not comment on trading updates ahead of results (due out on August 22).

In the announcement it said earnings were negatively affected by higher foreign exchange losses on working capital, intergroup loan funding and hedging instruments, among various other monetary items.

Meanwhile, the cost of funding was higher and higher debt levels came from delays in the receipt of proceeds from assets and businesses held for sale.

Previously, Imperial did not provide guidance related to headline earnings per share for the 2017 financial year, said Mark Hodgson, an analyst at Avior Capital Markets.

“However, Imperial provided revenue and operating profit guidance for the group and for the major business segments.

“Actual group operating profit for the 2017 financial year has come in slightly better than flat guidance previously — so the 11% to 14% [downside] in [headline earnings per share] is somewhat better than expectations.”

Hodgson said Imperial had largely communicated the reasons for this, such as closing out forward cover on certain imported items and higher forex losses in Africa. The stronger rand and a weaker underlying international logistics business had also been factors, he said.