Imperial Holdings plans to expand its logistics business, mainly into the rest of Africa, and will consider broadening its product range in the distribution of products with strong brands in the automotive and industrial markets.

The listed transport and mobility group spent R1.9 billion in the year to June on the acquisition of businesses and stakes in subsidiaries .

They included the acquisition of an additional 20 percent stake in Accordian Investments, a distributor of Tata vehicles from India, to increase its shareholding to a controlling 60 percent stake; DAF truck dealer Watts Truck and Van in the UK, which complements and strengthens its network for this brand in that country; and Datadot, a business that uses microdots as a security identification system to identify stolen goods, particularly vehicles.

Imperial chief executive Hubert Brody said yesterday that acquisitions over the past three years contributed R7bn to the group’s annual revenue.

He said the scale of the group’s activities in the automotive retail market offered many opportunities for extending and maximising its position in the value chain.

“Our experience in this field stands us in good stead and will enable us to earn ever increasing annuity income streams as our vehicle parc grows and we refine the use of technology and market intelligence.”

Brody said trading conditions in the southern African logistics division were expected to remain challenging in the short term because the pressure on the company’s manufacturing client base persisted and volumes remained under pressure.

However, the fundamentals of the logistics market were very good in the medium to long term and Imperial was ideally positioned to capitalise on growth opportunities and gain more business, he said.

“Expansion into Africa is a key priority and will continue to gain momentum. Acquisitions in both South Africa and the rest of Africa will be a further growth driver,” he said.

Yesterday Imperial reported a 14 percent increase in headline earnings a share to R15.66 in the year to June from R13.70 in the previous year. Revenue rose 25 percent to R80.83bn.

Operating profit improved by 25 percent to R5.64bn despite the operating margin remaining in line with the previous year at 7 percent.

A final dividend of R3.80 a share was declared, increasing the dividend for the full year to R6.80, 42 percent higher than the previous year.

Net debt to equity, excluding preference shares, increased to 39 percent from 30 percent as the group spent R1.9bn on acquisitions.

The acquisitions resulted in the group taking on an additional R1.6bn in debt but its net debt level is still comfortably below its target gearing range of 60 percent to 80 percent.

Brody said this left room for further expansion of the group.

Cash generated by operations before capital expenditure on rental assets increased 22 percent to R7.4bn.

Brody described the group’s results as “outstanding”, adding there was strong revenue and profit growth across the businesses. The company had experienced strong growth over the past years and established a much higher level of performance. But given market conditions, growth in the group’s 2013 financial year was expected to be at a slower rate.

Imperial stock rose 1.72 percent to R197.43 yesterday.

 

 

Source: iol.co.za