Imperial shares take to the skies
IMPERIAL Holdings shares on the JSE shot up by as much as 15.72 percent after the company reported its latest set of financial results.
The company’s shares closed 13.24 percent higher at R177.90.
Imperial is making progress with its strategy of driving the listed transport and mobility business away from motor business and South Africa.
Mark Lamberti, the group chief executive at Imperial, stressed yesterday that the reasons for this drive were the impact of the rand on the group’s import motor business.
It also had such a high market share in both logistics and in motor that growth opportunities were somewhat limited.
The operating profit of Imperial’s vehicle import, distribution and dealerships division dropped by 37 percent to R960 million in the year to June from R1.52 billion the previous year. This was caused directly by the weakening rand on the landed cost of imported vehicles, a narrowing of gross margins in the division, reduced competitiveness, lower sales and higher inventories.
Lamberti added that not only was the rand making Associated Motor Holdings (AMH) smaller, but the rest of the group was growing faster.
Acquisitions helped
Despite the sharply lower operating profit of this division, Imperial’s total operating profit increased by 1 percent to a record R6.23bn from R6.18bn, with non-vehicle operating profit growing by 14 percent to R2.7bn to account for 59 percent of group operating profit.
This increase was supported by the acquisitions during the year of South African-based pharmaceutical wholesaler Pharmed for R148m, Netherlands-based medical supplies wholesaler Imres for R647m and UK-based commercial vehicle dealership S&B Commercial for R167m.
Group revenue increased by 7 percent to a record R110.5bn from R103.6bn, with non-vehicle revenue growing 8 percent to R48.9bn and accounting for 43 percent of group revenue.
Imperial maintained its headline earnings a share at 1 624c.
A final cash dividend per share of 445c was declared, increasing the full year dividend to 795c. This was 3 percent lower than the 820c a share dividend declared in the previous year.
Imperial’s foreign operations, including Africa north of South Africa, now account for 37 percent of group revenue and 32 percent of group operating profit.
Lamberti said Imperial did not target any specific percentage revenue or operating profit from its non-motor business and there was “a general intent and it will fall where it may”.
He said Imperial believed the sales forecast for this calendar year by the National Association of Automobile Manufacturers of South Africa (Naamsa) at 595 000 vehicles was “a little ambitious”, and it was more likely to be between 585 000 to 590 000 vehicles.
However, Lamberti said the major restructuring of the motor industry involving Imperial and other dealers, which took place following the global financial crisis, had positioned the industry to make good returns with sales of “anything north of 450 000 to 500 000 vehicles a year”.
Lamberti said the major factor affecting Imperial in the year ahead would be the weakening of the rand. However, he stressed that the group’s concerns related only to the last quarter of its next financial year.
Solid until March
“By virtue of either inventory, forward cover or tactical buying of vehicles, we are looking solid up until March. The question is what happens in April, May and June next year.”
Lamberti said Imperial was expecting single digit growth of revenue and operating profit in its current financial year and the group’s performance was in line with these expectations.
R6.23bn Total operating profit for the group to June, up 1%