Imperial expects no profit growth

Disposing Goscor for R1.03bn

IMPERIAL Holdings is anticipating single digit revenue growth and no operating profit growth in continuing operations for the year to June 2016.

The listed transport and mobility group yesterday also reported it had agreed to dispose of its 67.5 percent shareholding in industrial equipment importer and distributor Goscor to management for R1.03 billion, which includes the discharge of shareholder loans of R730 million. This transaction is still subject to the approval of the competition authorities.

Goscor is a subsidiary of Imperial’s vehicle import, distribution and dealership division, but was regarded as non core to the group’s logistics and vehicle businesses.

Steady progress

Its disposal follows the group reporting in September the sale of its 100 percent interest in the Regent Group to a consortium comprising the Hollard Insurance Group and the Yellowwoods Group, the umbrella holding company of Hollard, for R2.3bn and last month the disposal of its 65 percent interest in Neska to Port Authority Häfen und Güterverkehr Köln, Germany, for €75 million (R1.14bn).

Mark Lamberti, the group chief executive of Imperial Holdings, told the group’s general meeting yesterday the group had registered steady progress over the past four months towards its strategic and operational objectives.

Lamberti said Imperial’s performance for the three months to September was well ahead of the previous year, but the general deterioration of the business and socio-political environment and various expected second quarter developments indicated a reversal of this trend in the second quarter. He said the precise timing of the disposal of Goscor, the Regent Group and Neska was also uncertain and would be felt in the second half of Imperial’s financial year.

Imperial in August reported a 7 percent growth in revenue to R110.5bn while operating profit increased by 1 percent to a record R6.2bn.

Lamberti said the regulatory decisions for these three disposals was expected be- tween January and June next year and if concluded would generate proceeds of about R4.3bn. He said these proceeds would be used to reduce debt until redeployed in accordance with the group’s strategic and investment criteria.

Lamberti stressed Imperial’s strategy regarding its portfolio was unchanged.

In an update on the performance of the various divisions in the group, Lamberti said the profitability of the Logistics Africa division in South Africa was under pressure, because of soft volumes in most sectors, particularly in consumer products and commodities.

However, Logistics Africa operations in the rest of Africa continued their strong positive contribution to revenue and operating profit performance, he said.

Contract gains

Lamberti said operating profit pressures in the Logistics International division arising from soft volumes and low water levels on European waterways were offset by contract gains and a growing contribution from the South American inland shipping contract.

He said the impact on the operating profit of the vehicle import, distribution and dealerships division of lower new vehicle sales was offset by firmer margins and improved workshop and parts performance.

The vehicle retail, rental and aftermarket parts division came under pressure as national vehicle sales declined and car rental volumes felt the effects of lower rental usage by government and corporations, he said.

However, aftermarket parts were performing to expectation, he said.

Shares in Imperial on the JSE fell by 2.4 percent to R175, which valued the company at R35.49bn.