File picture: Philimon Bulawayo
File picture: Philimon Bulawayo

Super Group has been on R800m acquisition spree

By Edward West Time of article published Aug 27, 2019

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CAPE TOWN – Super Group acquired three companies for about R800 million in July, a month after its 2019 year-end, and is seeking further opportunities in spite of the tough trading conditions in many of the markets where it operates, chief financial officer Colin Brown said yesterday.

He said in the supply-chain solutions market, companies were closing, going into liquidation or shutting divisions, which was creating opportunities for Super Group to grow its market share, and also possible bolt-on acquisitions.

The transport and logistics group with operations across Southern Africa, Europe and Australia, lifted headline earnings a share 12.5percent to 373.8cents in the year to June 30.

Its share price shot up more than 8percent immediately after the results were released yesterday afternoon, but slipped later to close at R28.75.

Revenue increased by 6.2 percent to R37.9billion.The gearing ratio improved to 24.1percent from 25.1percent in June 2018.

No dividend was declared. Brown said their capital allocation priorities were firstly to fund organic growth, then to follow acquisitive and other growth opportunities, then to buy back shares in Australia and on the JSE, and then only might dividends be considered, which hadn’t been the case for many years, he said.

The strong performances were attributed mainly to the sub-Saharan commodity-facing businesses. There were also solid performances by the industrial, technology, digistics and vehicle rental businesses in the Supply Chain Africa division. Dealerships in South Africa were under pressure, but outperformed overall national statistics, while dealerships in the UK delivered a solid performance despite the Brexit uncertainty.

Brown said: “With the consumer challenges and falling national car sales in South Africa, a depressed vehicle market and a slightly weaker economy in Germany, and a softening of the vehicle market in Australia, I think we have put up an exceptional performance.”

He said they expected the difficult trading conditions in most of Super Group’s markets for the new financial year, to continue. In particular luxury car sales in South Africa were expected to remain weak; Germany’s vehicle market was expected to be further impacted by the threat of recession and the impact of an emissions testing scandal on the automotive industry.

In July 2019, Super Group acquired a 65percent interest in Lieben Logistics and a 51percent interest in GLS Supply Chain Equipment, from Cape Town, for R498.8m and R96.3m, respectively. In the same month, Supply Chain Europe’s inTime acquired an 80percent interest in Trans-Logo-Tech for R184.3m.

Last July, an 80percent stake in Cargo Works, a specialist overnight cargo business, was bought for R49.5m, while a minority stake in Legend Logistics was acquired for R174.5m. Dealerships SA acquired Orbit Motors effective October 2018.

In the past year the Supply Chain Europe operations had performed poorly in Germany.

SG Fleet’s performance for the year was also under pressure as a result of some of the businesses within this division having to negotiate a range of external and legislative challenges.

Group chief executive Peter Mountford said Super Group had invested R2.1bn in net additions and acquisitions through the financial year to ensure the future growth of the group.

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