Super Group expects profit to dip 16% as interest rates take toll

Transport and logistics group Super Group expects its profits to have declined 16% in the six months ended December, partly affected by softening demand for vehicles in markets such as the UK, where interest rates rose to historic highs in 2023.

Its shares closed almost 11% weaker at R25.34 on the JSE on Tuesday.

In a trading update on Tuesday, Super Group said its headline earnings per share would probably soften to R2.01 during the reporting period from R2.40 in the same period a year ago.

EXCHANGE RATE

Super Group operates a network of vehicle dealerships as well as a plethora of mobility solutions across SA, UK, Europe and Australasia. About 54% of its revenue is generated outside SA, meaning it is sensitive to the rand exchange rate.

Group revenue is likely to have risen 12% to R33.2bn, boosted by a weaker rand, as well as the acquisition of UK-based logistics firm Amco.

While UK car dealerships were negatively affected by falling consumer demand as a result of high interest rates, dealerships in SA delivered “modest” growth in operating profit, according to Super Group.

CEO Peter Mountford said in a statement that the Southern African supply chain business performed well, despite a significant loss of trading volumes and very slow turnaround times at SA ports, which inconvenienced a number of big retailers over the festive period.

STRATEGY

The SG Fleet business, which caters to New Zealand and Australia, fared well during the reporting period, as did Fleet Africa unit, which operates in Kenya, Botswana and SA.

Mountford has been instrumental in driving the international strategy since taking up the hot seat in 2009, when the company was facing an existential crisis.