Imperial slides over logistics business
Imperial Holdings slipped more than 7% in early JSE trade on Tuesday after the transport and logistics group issued what one analyst said was a muted guidance for its logistics business.
At close of trade the share was 6.83% down at R15.89.
Imperial, which is in the final stages of separating its logistics and automotive businesses, said a combination of high unemployment, negative economic growth, VAT increases and fuel price rises weighed heavily on its logistics business.
Reduced volumes and depressed consumer demand thus affected Imperial Logistics’ performance in the first quarter of the 2019 financial year, Imperial said in an update after its annual general meeting (AGM). Imperial Logistics generates 32% if its revenue in SA.
Imperial Logistics’ revenue and operating profits for the first six months of the 2019 financial year will be flat, compared with those of the previous matching period, the company said.
Mark Hodgson, an analyst at Avior Capital Markets, said the muted financial guidance for Imperial Logistics was probably the main reason for market disappointment. “The Imperial trading update was overall relatively muted ahead of the expected unbundling of [Imperial’s automotive business] Motus later [in October],” Hodgson said.
Imperial said Motus performed satisfactorily in the first quarter due to higher prices and high volumes of entry-level and small sport utility vehicle sales as consumers traded down from luxury vehicle brands.
Imperial said the automotive business is expected to increase revenue and operating profit in the first half of the current financial year.
At the AGM, 48.16% of the group’s shareholders rejected the company remuneration policy. The group said it is reaching out to these shareholders. It has asked them to make written submissions by no later than November 9.
Imperial also announced investor relations and corporate advisory firm Afropulse as its BEE partner in a R200m transaction. In terms of the deal, Afropulse will acquire 25% in a vehicle that will house Imperial Logistics’ energy, mining and chemicals businesses.
The yet-to-be-formed company’s core business will be bulk road transportation management of liquids, gases, powders, ores and grains via road tankers and tippers.