‘Tough calls’ leave Imperial Logistics in good shape to face 2020
IMPERIAL Logistics yesterday reported that it had made “tough” calls with more than R2 billion of impairments and once-off restructuring costs in the year to the end of June, but said that it was in a much better shape to weather the tough trading conditions into 2020.
Chief executive Mohammed Akoojee said that the listed African and European logistics provider had sufficient financial muscle to expand into 2020.
Akoojee said the group was eyeing an expansion into air and sea transportation to include picking up products in Asia to add to its supply chain.
He said operating profit for continuing operations remained flat, despite strong cash generation, with R1.4bn of free cash flow following capital expenditure and maintenance. Imperial, which unbundled Motus November, reported a 7 percent
in decline in headline earnings per share of continuing operations to 542 cents.
Revenue was up 6 percent to R49.7bn, while operating profit from continuing operations fell 9 percent to R2.5bn. The group declared a final dividend of 109c per share.
Akoojee said good performance from African regions was offset by weaker operational performances, once-off trading costs of €4 million (R68m) in the international division.
The group said once-off costs for rationalisation and restructuring in its South African and international operations hit R170m.
It said the consumer packaged goods (CPG) business in South Africa was exited due to an unviable business model. This resulted in an impairment of assets and goodwill of R590m and a provision for closure costs of R850m post-tax.
Akoojee said they did not yet know how many CPG employees would be retrenched. Many of the contracts were being renegotiated and fitted into a different business model, and a number of CPG staff may be retained for these, said Akoojee.
He said R385m of fixed overhead costs in the South African and international divisions would be realised in the 2020 financial year, with a once-off associated once-off cost impact in 2019 R170m.
An impairment of R1.1bn off goodwill and intangible assets was driven by the deterioration in macroeconomic conditions in all three divisions.
Akoojee said economic uncertainty continued, both in SA and in Europe.
Imperial Logistics’ renewal rate on existing contracts remained in excess of 90 percent, with an “encouraging pipeline” of new opportunities.
New business revenue of R5.6bn was secured in the past 12 months.
Revenue from outside South Africa increased 9 percent to R36.6bn, or 74 percent, of group revenue.
Operating profit generated outside South Africa fell 11 percent to R1.6bn, or 63 percent of operating profit, largely impacted by once-off costs in Logistics International.
Motus was presented as a discontinued operation for the four months to October 31, 2018. A fair value gain of R4.3bn was recognised.
Imperial rose 8.90 percent on the JSE yesterday to close at R51.86.