GROWING PROFITS
Super Group continues with plans to expand its international footprint
SUPER Group is continuing with its strategy of expanding its international footprint to buffer the listed transport logistics and mobility company against the uncertain South African economy and emerging-market turmoil, despite the increased uncertainty in global and developed markets.
The group’s non-South African business contributed 38 percent of group revenue and 58 percent of group operating profit in the six months to December.
Opportunities
Peter Mountford, the chief executive of Super Group, said yesterday the group would like to increase operating profit to 65 to 70 percent, although this was not a strategic target.
Mountford said the group looked at the longer term, adding Australia was very stable as was the UK, and he had no doubt a sensible solution would be found for the UK and Europe following the vote for Brexit in the UK.
He added that the group looked at the right strategic opportunities, whether they were in southern Africa or elsewhere.
Mountford said the group had been implementing this strategy for about the past seven years and stressed that at no stage had the group said South Africa was not part of the strategy.
Mountford said the group’s non-South African operating profit was previously higher, reaching 63 percent in the year to June last year.
He said it was back down to 58 percent because of the group’s acquisition of the Western Cape dealership business of Sandown Motor Holdings, a subsidiary of Mercedes-Benz South Africa, for R699.3 million effective from September last year.
“It will go back up and should be over 60 percent in the future,” he said.
The acquisition of the dealership business from Sandown was one of a number of recent acquisitions by the group.
Mountford confirmed that the group was looking at further acquisition opportunities in SG Fleet in Australia and also in South Africa.
“There is nothing too large in the pipeline at the moment. The negotiations are not that advanced and (will) take some time still (to finalise),” he said.
Once-off events dented the financial performance of Super Group in the six months to December.
Forex profit
In the previous comparable period, the group’s earnings included acquisition costs of R88.8m and a once-off foreign exchange profit of R101.3m on the SG IN tIME forward-exchange contract compared to acquisition costs of R30.9m in this reporting period.
Excluding the acquisition costs and once-off foreign exchange profit, underlying earnings before taxation and amortisation in the current reporting period would have increased by 27.1 percent, operating profit by 22.7 percent and profit before tax by 21.9 percent.
Super Group reported a 17.4 percent increase in operating profit to R1.04 billion from R883m. Revenue rose by 15.1 percent to R14.1bn from R12.2bn, largely because of acquisitions, the inclusion of previous acquisitions for the full year and a turnaround from a loss to a profit in the results of SG Coal.
Core headline earnings a share, excluding the amortisation of intangible assets, acquisition costs, once-off foreign exchange gains and the costs related to the group’s black economic empowerment scheme, increased by 3.2 percent to 163.5 cents from 158.5c.
A dividend was not declared.
Mountford said the group was cautiously optimistic about growth prospects across its businesses despite expecting the countries in which the group operated to show low levels of domestic growth because of political and economic uncertainties.
Shares in Super Group fell 4.82 percent yesterday to close at R35.35.