Invicta Holdings was experiencing strong growth in offshore markets and resilient demand from local agriculture and mining customers, and the group was cautiously optimistic about its prospects, CEO Steven Joffe said yesterday.
The distributor of earthmoving, industrial, automotive and agricultural products increased earnings a share from continuing operations by 18%, to 481 cents in the 2023 year, which Joffe said in a telephone interview was a strong result considering the challenges they faced.
Revenue increased 8% to R7.8 billion. The Singapore-based Kian Ann increased sustainable headline earnings by 58%.
The rand’s depreciation resulted in a foreign exchange gain of R439 million. The group also repurchased about 5% of its ordinary and preference shares.
The gross profit margin increased from 30.7% to 32.5%. Cash on hand came to R730m, and net interest-bearing debt to equity was healthy at 18%. The dividend was raised by 11.1% to 100 cents from 90 cents.
There was upward pressure in supplier pricing, currency volatility as well as supply chain challenges, including shipping and logistics disruptions through the year.
In the Replacement Parts Services and Solutions (RPE) segment, with operations in SA, the UK and the US, revenue increased by 80% to R986m, with R108m operating profit.
“RPE worked hard on bringing the working capital to the appropriate levels in the UK and, in the US, has identified that obtaining a bonded status for its warehouses will support strong growth in the region,” he said.
Good demand was being experienced in this segment, and inventory levels were increased to take advantage of growth opportunities and to meet customers’ requirements through logistical challenges.
Kian Ann (KA), which supplies and manufactures replacement parts for heavy machinery and the automotive industry, expanded, with operations in China, Indonesia, Malaysia, India and the UK, and distribution in the US and Canada.
Invicta now owns 48.8% of Kian Ann, which reported an operating profit of Singapore $36m and $40m cash.
In the Replacement Parts Services and Solutions: Industrial (RPI) segment, which imports and manufactures industrial consumable products in southern Africa, grew revenue 8% to R4.8bn, with operating profit 29% higher at R317m.
“Mining is our biggest single industry served by RPI. Other than mining, we continue to serve a diverse range of customers,” he said. The order book was healthy.
Replacement Parts Services and Solutions: Auto Agri (RPA) operates in South Africa and in Europe, focusing on the import, assembly and distribution of automotive aftermarket parts, as well as parts for the agricultural industry, increased revenue 6% to R551m with operating profit 22% higher at R111m.
“Considering our Ukrainian business only operated for eight months, the turnover growth is a good achievement,” he said.
Capital Equipment and related parts and services (CE) reported a slight decline in revenue at R1.1bn, with sustainable operating profit reducing by 28% to R81m.
In this segment, earthmoving accounted for 77% of revenue and material handling 23%.
“With parts, service, and rental accounting for 34% of revenue, we can cover the cost of these operations based on these revenue streams.”
“Good mining activity continued this year, with good demand for larger capital equipment. We are hopeful the anticipated infrastructure spend will further assist our construction-facing businesses. Demand for electric forklifts is encouraging,” he said.
“The way forward will require a disciplined capital allocation approach and the ability to adapt as the markets evolve. Having a relatively debt-free business, gives you time to respond to difficult situations and provides capacity for us to implement our acquisition strategy, should the opportunities arise,” he said.
Joffe said a R45m investment in BMG China was aimed at building, over time, a strong online presence in China, distributing the industrial consumable products that Invicta distributes here in South Africa.
BUSINESS REPORT