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, said CEO Mark Lamberti on Wednesday.

Announcing the group’s results in Johannesburg, he said 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 said the company was unable to pass on the full exchange-rate related price increase to the consumer in a highly competitive local market, where local vehicle manufacturers were 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 imported 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, said Lamberti.

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

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

The group’s vehicle business, which included 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 profit increase by 30%, to R1.64-billion. This was a strong upwards curve 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 would use “the cash flow from the motor value chain to fund growth in logistics”, either through expansion, organic growth or further acquisitions, noted Lamberti.

Imperial was 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 included 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 said he expected 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 could right itself, to produce earnings in line with the 2014 financial year.

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

However, subsidiaries would also be called to account on “their strategic focus and competitiveness”. Costs could also be reduced by eliminating complexity in the organisation.

Lamberti added that there would be a “huge investment into executive development” at Imperial, as the company needed to build a pipeline of executive talent.

He referred to his appointment earlier this year as “somewhat of an indictment”.

Lamberti was appointed from outside the group to succeed Hubert Brody. He founded the Massmart group in 1990.