CAPE TOWN – Imperial Logistics said on Tuesday that its headline earnings tumbled 65 percent to 156 cents in the year to the end of June due to the impact of Covid-19 on revenue, once-off costs, restructuring and impairments, but its shares shrugged off the news, rising 5.7 percent on the JSE to close at R37.10.
Chief executive Mohammed Akoojee said it had been a challenging year, but the group managed to increase revenue, generate strong cash flows, maintain a healthy balance sheet, manage costs and make progress against strategy.
Akoojee said the land-based freight firm, which also has operations in Europe, decided not to declare a dividend and postponed the decision to reinstate a dividend to the interim stage.
Liquidity was strong, with R13.2 billion of banking facilities and cash available, post the receipt of the proceeds from the sale of the European shipping business.
The Market Access business, which operates in east, west and southern Africa, grew revenue 18 percent to R12.4bn, while operating profit fell marginally by 1 percent to R710 million.
About 90 percent of the business was in operation following various lockdown measures, and normal trading was expected in the short- to medium-term, as the lockdown restrictions on alcohol and tobacco had been lifted.
The Logistics Africa division saw revenue grow 3 percent, but operating profit fell 34 percent.
The Logistics International division was most impacted by the Covid-19 pandemic, with revenue and operating profit falling 7 percent and 78 percent, respectively, in euros.
At this stage, Imperial expected to deliver revenue, operating profit and headline earnings growth in the 2021 financial year compared with the prior year.
Strategic acquisitions worth R900m were concluded, mainly in the second half, which contributed positively.
New business revenue of about R6.2bn a year was secured to the end of June 2020.
The Market Access operations reported new contract gains of R1.7bn annualised revenue and the inclusion of new acquisitions.
“While our healthcare businesses performed well, and we are still able to service various channels in most markets in our consumer business, demand has reduced, due to lower activity, mainly in markets where sales of liquor and tobacco were negatively impacted due to Covid-19-related trading restrictions,” Akoojee said.
Logistics Africa’s results were supported with new contract gains of R2bn annualised revenue.
Logistics International lost €78m (R1.57bn) of revenue during the peak of Covid-19, as this business was to the automotive and industrial sectors, where the impact of the pandemic was most severe.
Once-off impairments due to Covid-19 and low water levels in South America negatively impacted operating profit.
Eleven of the group employees died from the Covid-19 virus, and up to the end of July, 385 employees had tested positive, with the majority making a full recovery, Akoojee said.
“We are transforming Imperial from a portfolio of regional businesses to an integrated, end-to-end market access and logistics business. Our ability to build this business and serve our clients and principals in some of the most challenging markets in Africa is a key differentiator for Imperial. We will seek to grow the business both organically and through strategic acquisitions in Africa and selected markets,” he said.
“We anticipate the impact of Covid-19 to significantly impact our operations and performance in the short term. However, a significant recovery was recorded across the business in July and August 2020.”
He said Imperial remained optimistic about the opportunities inherent in Africa’s rising consumerism, urbanisation, population growth and the strengthening of healthcare systems, which would drive the demand for skilled market access and logistics capabilities.
BUSINESS REPORT