The JSE-listed Imperial group breached the R100-billion revenue mark for the first time in the past financial year, ended June 30.

Revenue was up 12% on the previous financial year, to R103.6-billion, with operating profit up 2% to R6.2-billion.

While rand weakness during the period assisted the group’s overseas logistics business, it significantly weakened the performance of Imperial’s vehicle import business, ensuring a R710-million, or 32%, decline in operating profit at the Vehicle Import, Distribution and Dealerships division, says CEO Mark Lamberti.

He says the weak rand, which increased the price at which Imperial imported cars had the biggest effect on the group’s results in the past year, and could continue to do so this financial year. He says the company has been unable to pass on the full exchange-related price increase to the consumer in a highly competitive local market, where local vehicle manufacturers are not subject to similar import price pressures.

New-vehicle prices in South Africa, on average, increased by 7% in the second quarter of this year, compared with the same period last year.

Imperial imports 18 vehicle and industrial brands into South Africa, including Hyundai, Kia, Renault and Crown forklifts. Direct imported brands represent around 15% of the passenger car market in South Africa, says Lamberti.

Imperial’s imported car parc in South Africa stands at 910 041 units, up from 107 363 units in 2004.

Lamberti says the group will continue to “try and decouple” Imperial from the cyclicality of new-car sales in South Africa. He says Imperial cannot allow one-quarter of its business to influence the whole company, as has been the case in the past year.

The group’s vehicle business, which includes imports, distribution, dealerships, retail, rental and the aftermarket, increased revenue by 6% to R61.1-billion for the financial year, with operating profit down 14% to R3.1-billion.

The logistics business increased revenue by 23% to R41.3-billion, and operating profit by 33% to R2.2-billion.

Financial services saw revenue drop by 2% to R4.1-billion, with operating profit up 14% to R1.1-billion.

Imperial’s total foreign operations saw an increase in profit by 30% to R1.6-billion. This was a strong move up from the R604-million profit recorded from foreign operations in the 2011 financial year.

While keeping its eye on the ball in the vehicle business, Imperial will use “the cash flow from the vehicle chain to fund growth in logistics”, either through expansion, organic growth or further acquisitions, notes Lamberti.

Imperial is expanding its reach into Africa, with operating profit from logistics operations on the continent, outside South Africa, growing to R334-million in the year ended June 30, up from R224-million in the previous financial year.

Imperial Logistics’ business outside Africa, largely in Europe, reported a 4.5% increase in profit in euro terms, but 27% in rand terms to R971-million.

Recent acquisitions by Imperial include a $100-million 68% share in Nigerian pharmaceutical distributor Eco Health, a further 11% (to go to 60%) share in Renault South Africa for R65-million, and a R148-million deal to buy 62.5% in Pharmed, a pharmaceutical wholesaler in Durban and Johannesburg.

Looking ahead, Lamberti says he expects Imperial’s earnings in the first half of the new financial year to decline as the currency impact on vehicle imports flow through. However, should the rand remain stable, this situation can right itself, to produce earnings in line with the 2014 financial year.

From a strategic point of view, Lamberti says Imperial will stick to its knitting, in allocating its capital in a sensible way, and to build the group through acquisitions, investments, mergers, good governance and by driving its subsidiaries.