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Feb 10, 2014

Demand for African logistics boosts Super Group’s H1 showing

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Photo: Bloomberg
 
 
 
Harare|Africa|Environment|Great Wall Motors|Industrial|Mining|Motors|Super Group|Supply Chain South Africa|Africa|Australia|Mauritius|Asset-based Finance Loans|Logistics|Logistics Subsidiary|Mobility|Motors|Net Finance Costs|Services|Motors|Motors|Operations|South Africa
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Despite the “highly competitive” trading environment and “strenuous” economic conditions of last year, transport logistics and mobility group Super Group (SG) has posted across-the-board improvements in its performance for the six months ended December 31, citing “robust” logistics demand in Africa, characterised by an increase in north- and south-bound activity.

The JSE-listed group, which lifted revenue by 31.5% to R7.1-billion for the period, attributed this largely to strong performances by the majority of its logistics subsidiary Supply Chain South Africa.

This, it stated in an interim results statement on Monday, was despite the local transport and logistics industry being impacted by underlying factors such as weak consumer spend, challenges faced by the mining sector as well as above-inflation cost increases across the local industrial sectors.

Earnings per share and headline earnings per share for the period under review increased by 24.9% to 121.9c and 26.7% to 120.7c respectively.

Profit before taxation increased by 20.7% to R592-million, largely the result of the improved operational profitability of the group, while a 25.7% growth in operating profit to R651-million was driven by operational efficiencies generated by a “stringent focus” on cost controls within the operations.

However, as a result of the competitive landscape and resultant margin pressure experienced by Supply Chain South Africa's SG Consumer business and the retracted novated-lease market in Australia, the overall operating profit margin declined to 9.1%.

Further, an increase in net finance costs by 116.7% to R59-million related to the annualisation of several acquisitions, an increase in asset-based finance loans and the interest impact of the acquisitions.

The increase in total assets of 12.9% to R11.9-billion was mainly as a result of capital expenditure of R461-million for vehicle purchases for Supply Chain South Africa businesses SG Freight and Super Rent as well as for the African Logistics operations.

SG’s net debt position on December 31 increased to R241-million.

OPERATING BUSINESSES

The majority of Supply Chain South Africa’s businesses delivered a “commendable” performance over the first six months of the year, while subsidiary African Logistics benefitted from improved efficiencies, following the renewal of the fleet and increased cross-border activity.

Improved north- and south-bound activities, as well as additional activity on the Beira-Harare route were experienced.

“The renewed African Logistics' fleet is running at an average capacity of 94%. This, combined with rand weakness over the period, which resulted in a foreign exchange gain of R10.6-million, contributed to a sterling set of results,” the company said.

Meanwhile, dealerships across the group’s portfolio reported good results, reflecting the inclusion of two Great Wall Motors dealerships acquired during the period and a solid performance by the finance and insurance operations.

New vehicle sales increased by 8.2% over the period, which was “well ahead” of market growth, while the group’s services segment, which included corporate functions, Emerald Insurance and the Mauritius operations, performed in line with expectations.

PROSPECTS

The group said on Monday that, while the outlook for the South African economy was subdued, it believed that there were opportunities to expand its core businesses.

“The domestic medium-term note programme will allow the group to diversify its sources of funding, optimise its borrowing costs and facilitate its growth strategy, both organically and through acquisitions in its core divisions,” SG stated.

Supply Chain South Africa would continue to focus on niche opportunities within the food services, retail and pharmaceutical sectors.

Meanwhile, African Logistics remained “strategically positioned” to profit from any increased activity in sub-Saharan Africa and would continue to investigate new opportunities in the region. 

SG did not declare a dividend for the period.

Edited by: Tracy Hancock
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