Imperial highlights ‘uncontrollable events’ that affected its performance
Says events hurt group’s performance
IMPERIAL Holdings has highlighted a number of “uncontrollable events”, including political interference in South Africa, that negatively affected the performance of listed transport and mobility group.
Mark Lamberti, the chief executive of Imperial, said yesterday that shareholders were well aware of the global, regional and local factors contributing to generally lacklustre economic growth but political developments in recent times in many of the jurisdictions in which Imperial traded had exacerbated the unpredictability of trading conditions and the volatility of currencies.
Lamberti told a general meeting of shareholders more specific uncontrollable events directly influencing Imperial’s businesses in the first quarter of its 2017 financial year included subdued consumer goods and commodity volumes, currency movements and a 14.3 percent decline in reported new vehicle sales in the nine months to September.
Downgrade
But Lamberti said the situation in South Africa warranted specific comment, adding the most recent downgrade of the 2016 gross domestic product forecast to 0.5 percent was largely attributable “to avoidable local factors”.
“Business and consumer confidence is being eroded by serious political interference in the workings of core public institutions and state-owned enterprises.
“Such activity is being conducted with appalling self interest, impunity and duplicity at the expense of national priorities such as economic growth, fiscal rectitude, policy certainty, unemployment and poverty alleviation, crime prevention and the funding of universities,” he said.
Lamberti said the group was engaging with patriotic leaders of integrity in the government, business, labour and civil society to eliminate unconstitutional behaviour and corruption and to marshal the considerable resources of the country in pursuit of inclusive growth and urgent national priorities, not least the preservation of South Africa investment grade status.
If South Africa lost its investment grade credit rating, it could create a variety of “unpredictable negative consequences”, he said.
Turning to the group, Lamberti said it remained intent on releasing capital and sharpening executive focus by disposing of non-core, strategically misaligned, underperforming or low return on effort assets.
Lamberti said since Imperial’s year end it acquired a 95 percent interest in Palletways Group for R3 billion and disposed of Mix Telematics for R474 million and 51 percent of the C2 Computers Group for R55m while R1.4bn was planned to be realised in the current financial year from the disposal of non-strategic properties.
He said the disposal of Regent Insurance and Regent Life Assurance for R2.2bn was still subject to regulatory approval but the Competition Commission had recommended the transaction be prohibited, a decision the parties believed was based on incorrect assumptions.
Revenue growth
Lamberti said overall the group was expected to achieve single-digit revenue growth and a moderate decline in operating profit in continuing operations for the year to June.
But Lamberti stressed this outlook was subject to stable currencies in the economies in which Imperial operated and South Africa retaining its investment grade status.
He said revenue and operating profit growth was expected from the South African logistics sub-division in the year to June but a decline in revenue and operating profit anticipated from the African logistics sub-division, largely because of the impact of currency movements.
He said revenue and operating profit growth was expected from the international logistics sub division but this would be attributable solely to the acquisition of Palletways. Lamberti said flat revenue and a decline in operating profit was expected from the import, retail, rental and aftermarket parts sub-division of Motus Corporation, the new name for the group’s vehicle interests.
Imperial shares fell 0.39 percent yesterday to R169.95.