Imperial Logistics to cut deep at SA, European businesses

28th February 2019 By: Irma Venter - Creamer Media Senior Deputy Editor

Imperial Logistics to cut deep at SA, European businesses

Mohammed Akoojee

Imperial Logistics will cut another 10% in overhead costs at its South African operations, as well as roughly 20% at its European operations, says CEO Mohammed Akoojee.

Speaking at the company’s financial results announcement in Johannesburg on Thursday, he said the cuts were “material”, but noted that it was “the right thing to do”.

He said Imperial Logistics had sold a lot of businesses in Europe, but that it had not yet resulted in the desired cost-savings.

He added that Imperial Logistics was in the “final throes” of a three-year restructuring process, which should deliver results in 2020 financial year.

Reporting its results for the first time as a standalone JSE-listed entity, Imperial Logistics delivered a 1% increase in revenue for the six months ended December 31, compared with the same period in 2017, to R26.6-billion.

Operating profit was down 4%, to R1.32-billion. This number includes businesses held for sale in the prior period.

Imperial Logistics’ numbers were tripped up by underperformance in the consumer packaged goods and healthcare businesses in Logistics South Africa, as well as the automotive and express palletised distribution businesses in Logistics International.

Palletways was performing below expectations, said Akoojee.

“It has not grown to where we would have liked it to be by now.”

Logistics International also struggled with the lowest water levels on the Rhine river in recorded history.

The Rhine is a cornerstone of the logistics industry in Europe.

Implementation of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) had also resulted in significantly lower vehicle production volumes in Europe for the six months under review, “hurting our business”, noted Akoojee.

The WLTP is a new test, implemented in 2017, to measure fuel consumption and carbon dioxide emissions for passenger cars.

Imperial Logistics’ business in Europe is strongly focused on the automotive and chemicals sectors.

In South Africa, Imperial Logistics witnessed a roughly 10% decrease in volumes in the general market place across a number of sectors, such as manufacturing and consumer goods.

Akoojee said this created pressure from clients and competitors in terms of pricing.

Logistics South Africa reported a 9% drop in operating profit for the six month period to December 31, to R457-million, while Logistics International saw a 7% decline, to R402-million.

Logistics African Regions reported a 16% jump in operating profit, to R465-million.

There was an opportunity for this business to look at further acquisitions, said Akoojee.

Looking ahead, he expected the full 2019 financial year to deliver higher revenue than the previous year, but lower operating profit. However, he expected the 2020 financial year to produce improved results.