Pretoria - The possible future unbundling of the logistics and vehicle businesses of the Imperial Group is on the table.
Mark Lamberti, the chief executive of the listed transport and mobility group, said yesterday that the objective was to create shareholder value but the value of Imperial today was not significantly different to what it was 10 years ago.
“When I walked into this job on March 1, 2014, I was tasked with creating shareholder value for shareholders and so all ideas to create shareholder value are on the table. In a group of this size and complexity, some kind of unbundling must be on the agenda,” he said.
Lamberti said he had been intimately involved with the unbundling of Woolworths, Truworths and Massmart from Wooltru, adding that the value created “was unbelievable”.
But he stressed investors had to have greater access to more focused assets and probably next year this time Imperial would probably have two very different but focused businesses, logistics and motor.
Shareholder value
“At the moment, some of the moves we are making look like: we are tidying up, we are focusing it, we are putting our attention, efforts and resources in the right places,†Lamberti said.
But he said until this manifested in improved performance, the group could not have the next discussion about the best way to create shareholder value.
“We are not having that discussion even internally until we say we have got really great focused businesses and they are really doing well. I would be disappointed if this time next year we couldn't ask that question.
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“The question is implicit in everything we have done so far, in getting rid of stuff that doesn’t fit with that picture and focusing them managerially and organisationally,”he said.
Lamberti added that to create shareholder value, ÂImperial needed to bridge the gap between its revenue and that of its operating profit and market value, with the group ranked 13th on the JSE in terms of revenue, 27th in terms of its operating profit and 62nd in terms of its market value.
Imperial yesterday reported a 3 percent decline in headline earnings a share to R15.79 in the year to June from R16.24 in the previous comparable period.
Revenue rose by 8 percent to a record R118.85 billion from R110.48bn. Operating profit improved by 3 percent to a record R6.4bn from R6.2bn.
Cash generated by operations declined by a percent to R8.95bn from R9.05bn. An unchanged dividend of R7.95 was declared for the full year.
The logistics business grew revenue by 8 percent to R47.9bn, but operating profit was unchanged at R2.5bn.
The vehicle import, distribution and dealerships business increased revenue by 4 percent to R28.5bn, with operating profit improving by 20 percent to R1.1bn.
Revenue growth
Lamberti said the automotive imports business had done “quite well” despite the volatility and weakness in the value of the rand.
He attributed this to an environment in which the group could increase vehicle prices and the support it received from vehicle manufacturers who were loathe to lose market share.
Lamberti did not see any reason for a marked improvement in the economies where the group operated during the 2017 financial year.
He said the current outlook for Imperial in its 2017 financial year, including the impact of recent disposals, acquisitions and restructuring, indicated single-digit revenue growth and a moderate decline in operating profit from continuing operations. Shares fell 1.44 percent to R168.73.
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