Hudaco sees faster policy action after poll

Hudaco Industries, an importer of automotive, industrial and electrical products, says it is optimistic about seeing meaningful action and policy implementation from the government as the general election kickstarts the economy.

The JSE-listed group said its diversified business model has helped it navigate the weak economic and tough operational environment in SA, having made R171m in acquisitions in 2023 as part of its bid to further vary its portfolio.

Operating through its two main verticals; consumer-related products and engineering consumables, the group said its businesses are well placed to benefit from reinvigorated investor confidence and functional municipalities.

“We expect that in the first half we will experience more of the same inertia as business adopts a wait-and-see approach,” Hudaco said on Thursday. “However, we are ever hopeful for change and a positive electoral outcome for the country, followed by some meaningful action and implementation from the government on the policy front.

“The country desperately needs to counter high unemployment and reverse the performance deterioration seen in almost every area under government and municipal control. This would kick-start the economy and hopefully translates into investment in those sectors that are traditional Hudaco markets.”

Operating profit rose 5% to R1bn for the year to the end of November and headline earnings per share (Heps), a common profit measure in SA that excludes certain items, 7% to 2148c.

Cash generated from operations rose slightly, 1% to R902m.

The board increased the final dividend 12% to 700c per share, resulting in a total dividend for 2023 of 1,025c, up 10.8% from 2022.

CEO Graham Dunford said the performance was achieved despite disruptions in SA’s electricity and logistics networks.

“The last year was the worst year yet from a load-shedding perspective. Coupled with increased chaos at our ports and Transnet’s substantial and escalating logistical issues, this is severely damaging the country’s economy and foreign investor confidence.

However, Dunford highlighted that the benefit of having a defensive, robust portfolio of diverse businesses was evident in 2023 because when “the consumer-related products businesses found the environment very difficult with consumer spending under so much pressure, the engineering consumables businesses came to the fore with a sterling performance”.

Last year Hudaco agreed to acquire local plastic welding equipment importer and stockist Plasti-Weld for up to R56m, and also bought Brigit Fire group for R315m in a bid to further diversify its revenue streams.

Hudaco Energy, its alternative energy business, is touted to be well-positioned for growth as load-shedding continues into 2024 and beyond.

“We expect another year of strong cash generation as the excess stock in our alternative energy businesses is sold,” said the company.

The industrial company with a market capitalisation of R4.9bn has maintained a steady dividend to shareholders and recently bought R112m of its shares after getting approval from investors.

At R159, Hudaco’s share price has risen more than 60% in the past three years.