Super Group sets sights on Europe

Primary focus of acquisitions to be in the EU

SUPER Group has its eye on further acquisitions in Europe and South Africa.

Peter Mountford, the chief executive of the transport and mobility group, said yesterday that the primary focus of its acquisition activity would be in Europe and Australia, but there was nothing on the immediate horizon.

However, Mountford said there were a number of significant opportunities in South Africa, particularly in supply chain, and smaller and medium-sized opportunities in vehicle dealerships that might come to fruition in the next seven months.

Post Super Group’s financial year-end to June, the group expanded its geographical footprint by acquiring a 75 percent shareholding in German niche logistics service provider IN tIME Holding for € 153.5 million (R2.3 billion).

Mountford confirmed there was an opportunity to build onto that business and some were “coming onto the radar”.

“There tends to be a long incubation period to get these opportunities across the line, but there is a significant opportunity to consolidate in that space,” he said.

He confirmed a certain element of Super Group’s strategy was to be a rand hedge stock.

He said 53 percent of Super Group’s profit before tax at the moment came from outside South Africa, including its African businesses, and that would increase to above 60 percent in the next year.

“We would be comfortable with 65 percent to 67 percent of our profit before tax coming from outside South Africa.”

Super Group yesterday reported a strong set of financial results in the year to June despite a disappointing performance by its African logistics operations.

Core headline earnings a share increased by 11 percent to 289.1 cents from 260.90c.

Revenue rose 39 percent to R19.8bn from R14.3bn on the back of solid performances by the supply chain business in South Africa, both its fleet solutions businesses and its vehicle dealership operations.

Operating profit grew by 12 percent to R1.5bn from R1.34bn despite the group operating margin deteriorating to 7.6 percent from 9.4 percent.

Mountford attributed this to the acquisition of Allen Ford UK and the extremely disappointing performance of African Logistics, which was impacted by depressed commodity prices.

He said transport rates had dropped by an effective 11.9 percent in the past year and it had to “ride this one out”.

But Mountford said it had reduced the size of its transport fleet and costs, improved efficiencies and was driving excess overheads out of the business while also looking for new business in petrochemicals, industrial and fast-moving consumer goods industries plus mining work that was “a payable proposition”.

The vehicle dealerships business in the UK contributed R52.3m of the total R1.99bn profit before tax achieved by its dealerships business.

Mountford said the Allen Ford UK acquisition only contributed seven months of the year and was impacted by the transaction costs. “Its contribution will double in the forthcoming year,” he said.

A dividend was not declared.

Shares in Super Group dropped by 4.43 percent yesterday to close at R32.39.