Financial muscle puts Imperial on course for more acquisitions
Sikonathi Mantshantsha IMPERIAL Holdings, the owner of South Africa’s largest car dealer network, plans to use its cash to make further acquisitions following seven purchases in the fiscal first half.
Takeovers in the six months to December included firms in the bulk shipping, logistics and security identification industries in southern Africa and Europe, the vehicle retailer said yesterday.
“Imperial’s balance sheet remains strong, despite significant organic and acquisitive growth during the period under review, and the group is well positioned to take advantage of attractive acquisition opportunities as they arise,” the company said.
The company’s transactions included the September 20 purchase of a 74.9 percent stake in Dettmar Bulk Reederei, a family-owned dry bulk shipping business based in Germany, and the acquisition of 60 percent of IJ Snyman Transport, a logistics service provider operating in Angola, the Democratic Republic of Congo, Namibia and South Africa.
The company had unused facilities of R7 billion and was still below its targeted gearing range of 60 percent to 80 percent, it said.
“The cash facilities and gearing demonstrate the group’s financial strength,” chief executive Hubert Brody said yesterday.
While Imperial will continue to make acquisitions, it might not use all the money.
“It all depends on what we can find and the market environment,” Brody added.
The company would continue to target small- and medium-sized businesses in the logistics sector, Brody said, adding that the most immediate task was to integrate the acquisition of logistics company Lehnkering Holding. That purchase became effective in January, after the reporting period ended.
Imperial said it was “ideally positioned to capitalise on growth opportunities” for the remainder of the year.
The company’s first-half operating profit increased 23 percent to R2.62bn as South African new vehicle sales advanced 14 percent.
Imperial said that the logistics division increased revenue by 28 percent, bolstered by good performance from the European and the company’s southern Africa divisions.
Core earnings, the group’s measure of profit, which excludes large non-operational items, rose 30 percent to R7.56 a share from R5.81 a year earlier. Net income fell to R1.35bn. The company increased its interim dividend to R3 a share from R2.20 a year earlier.
“We expect to repeat the strong performance of the first half during the second half,” said Brody.
At 40 percent of earnings, Imperial believed the dividend payout ratio was appropriate for the current environment, he said. – Bloomberg