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Hudaco achieves strong year despite operating headwinds

3rd February 2023

By: Tasneem Bulbulia

Senior Contributing Editor Online


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JSE-listed Hudaco Industries has declared a final dividend from income reserves of 625c apiece for the financial year ended November 30, 2022.

The South African group specialises in the importation and distribution of a range of branded automotive, industrial and electronic consumable products, mainly in the Southern African region.

The group says in its condensed financial statements for the period that it is “delighted” with the results achieved, especially as they follow the “excellent” results produced in 2021.

For perspective, compared with the pre-Covid-19 results, comparable earnings a share have increased by 57%. This has been achieved not on the back of buoyant economic conditions but rather in an extremely challenging environment, Hudaco avers.  

The group highlights the challenging business climate in South Africa, with record levels of loadshedding and the associated costs being the biggest headwind. This was followed by flooding in KwaZulu-Natal and persistent logistical challenges at ports, exacerbated by the floods and by strike action, all of which further increased disruptions and costs in the value chain.

Internationally, Hudaco says, the Russia-Ukraine situation disrupted elements of the world supply chain and drove up logistics costs, while China’s zero-Covid-19 policy slowed its economy, causing stock shortages, including of essential components. The ongoing unavailability of shipping containers and disruptive currency volatility contributed to the difficulties faced by the group.

“There has been some international and local easing in supply chain constraints, but the underlying problems remain. Shipping lines are increasingly reluctant to endure the delays involved in docking at Durban port. There are still production backlogs in China and the worldwide shortage of semiconductors and certain raw materials, which have had a knock-on impact on many other products, still need to be resolved.

“On the brighter side, the cost of shipping a container has come down somewhat but still exceeds pre-Covid levels. Fortunately, for most of our products, Hudaco has pricing power and can pass these increases on to our customers, thereby protecting our margins,” the group indicates.

Since Covid-19, Hudaco has invested in its existing businesses by increasing inventory levels by about one month’s sales to ensure it can meet demand from customers despite the supply chain constraints.

It has also deployed available capital in repurchasing Hudaco shares, with acquisition options deemed unattractive.

During the 2022 financial year, it repurchased and cancelled 928 740 shares, with the total cost of R133-million.

Yearly turnover was up 12.3% year-on-year to R8.2-billion, while operating profit increased by 23.4% to R1-billion.

Turnover from the consumer-related products segment was up 13%, and operating profit increased by 19.8%. Engineering consumables turnover increased by 11.6%, while operating profit increased by 28.5%.

The operating profit margin increased from 10.4% to 12%.

Hudaco’s sales analysis by market sector shows the turnaround in the security sector and the growth in sustainable energy

The return on equity increased from 19.5% to 21.7%, and the cash-generative nature of Hudaco’s businesses was evident with cash generated from operations of R893-million, the group posits.

The final dividend has been increased to 625c, giving a total dividend for 2022 of 925c apiece, 21.7% higher than in 2021.


Hudaco says its financial position remains healthy and that more of the strong cash generation than usual was invested in working capital, mainly through a strategic increase in inventories of R290-million, taking it to R2 355-million while still leaving the group with R621-million net bank borrowings at year-end .

Notably, interest payments were covered almost 18 times by operating profits, which compares with the group’s internal benchmark of at least five times.

“We still have significant additional bank borrowing facilities, so there is capacity for acquisitions. We continue to look for businesses in growth areas to diversify further and strengthen our portfolio of businesses,” Hudaco states.


On the back of two years of solid growth under extremely challenging conditions, Hudaco says it is in a very strong position to weather this year.

“The market shares our businesses have gained will be maintained, and this is now our new base to grow from.

“In the consumer-related products segment, we expect to see further improvement in our security and communications businesses. Our automotive aftermarket businesses should continue to benefit from the growing second-hand carpool requiring more replacement parts.

“Thus far, our excitement about the alternative energy sector has been justified, and we remain positive about the impact our year-old Hudaco Energy business should bring to our diesel engine, battery and electrical businesses already supplying to the sustainable energy market,” the group outlines.

Since its acquisition, CADAC is noted to have performed well above expectations and Hudaco is bullish about its growth potential.

“The synergies and consolidations we have implemented over the last two years have contributed to our market share gains, and we believe there is more to come in the year ahead.

“We estimate that the overall negative impact of the floods in KwaZulu-Natal on the group’s operating profit was around R20-million, which hopefully will not be repeated in 2023,” the group outlines.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online



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