Despite ongoing macroeconomic challenges and tough trading conditions in several key markets and industry sectors, supply chain and vehicle dealership company Super Group increased its revenue for the six months ended December 31 by 8.4% year-on-year to R21.64-billion.

The group’s operating profit increased by 29.7% to R1.59-billion, while its net asset value a share increased by 13.1% to R36.57 apiece.

Super Group’s earnings a share increased by 18.8% to R1.90, while its headline earnings a share increased by 19.6% to R1.90 apiece.

Earnings before interest, taxes, depreciation and amortisation were up 51.1% to R3.31-billion, while profit before tax increased by 22.9% to R1.22-billion.

During December, Super Group settled R287-million of its listed senior unsecured notes. The net debt position, excluding International Financial Reporting Standards 16’s right of use (RoU) lease liabilities and securitised warehouse lease portfolio borrowings, was R3.43-billion, up from the R2.32-billion as at the end of June 30, 2021.

This R1.11-billion increase resulted in the net debt to equity ratio, excluding RoU lease liabilities and securitised warehouse lease portfolio borrowings, increasing to 20.6% from the 16.8% of the first half of 2021.

Super Group states that it is continuing to meet its debt covenants and has sufficient debt facilities to meet its current obligations.

CEO Peter Mountford says cash generated from operations increased by 14.4% to R2.91-billion, with the operating profit margin having increased from 6.1% in the prior comparable period to 7.3%.

“This performance reflects the four-month impact of the LeasePlan acquisition and strong sales performances in our South African supply chain and fleet businesses,” he explains.

Super Group Fleet acquired 100% of the ordinary shares in LeasePlan Australia and LeasePlan New Zealand on September 1, 2021. The acquisition consideration of A$626-million was settled in cash to the value of A$273-million and was complemented by a scrip consideration of A$129.3-million.

Mountford adds that the consumer-facing businesses were significantly impacted by the civil unrest in July 2021, but that swift action to reduce the disruption to clients and “exceptional” efforts to regain lost revenue led to them performing ahead of expectations in the period.

In addition, the availability of new-vehicle inventories was severely restricted by the global semi-conductor supply issue, which consequently impacted on new-vehicle sales volumes in the dealership divisions and also resulted in lower end-of-lease volumes in Super Group Fleet.

Nonetheless, he says Super Group’s operations in South Africa, Australasia, the UK and Europe continue to be impacted by Covid-19-related economic disruptions. “The business remains focused on cost containment and improved operational efficiencies.”

In addressing challenges, Mountford says Super Group’s global teams have worked “tirelessly” with clients to manage and mitigate the impact of disruptive supply and logistics issues. “These include the ongoing semi-conductor crisis, which impacted the European supply chain business and dealership operations in South Africa and the UK.”

Considering these challenges, he says Super Group’s dealership businesses performed well with stronger vehicle sales margins, higher average retail prices and good aftermarket parts and service performances bolstering revenue.

Going forward, Mountford notes that the global economy entered 2022 with significant product supply constraints and international logistics challenges, while the group’s trading environment will remain tough as a result.

“As technological innovators, we remain committed to delivering sustainable returns through acquisition opportunities and the development of new revenue streams, targeting additional markets and diversifying our service offering,” he says.

Further, a stressed consumer environment and vehicle shortages will continue to make the South African dealership market challenging.

With an increased focus on growing entry-level sales volumes and with the semi-conductor crisis expected to abate towards June this year, Super Group expects to improve sales volumes in comparison with 2021, to at least match National Association of Automobile Manufacturers of South Africa’s growth statistics.

The business will also continue to reap the benefits of rightsizing, cost containment initiatives and the efficiencies inherent in multi-franchising.

Meanwhile, a steady recovery in economic activity in the UK will benefit the dealerships business in that country, with supply and sales volumes also set to improve as the semi-conductor crisis wanes.

In both the UK and South Africa, an ongoing focus on digital innovation and a robust digital sales strategy continue to positively position Super Group in a rapidly evolving market, growing the sales pipeline and improving long-term customer retention, the company states.