Super Group in first revenue and earnings fall in 11 years
A deteriorating local economy, exacerbated by a competitive market; political uncertainty in Europe and UK; and changes in SG Fleet’s product offering caused the declines, a trading statement said yesterday.
A decline in revenue and operating profit of about 3percent (December 2018 revenue: R19.4billion) and 8.7percent (December 2018: R1.3bn), respectively, was expected in the interim period. Cash generated increased 37.9percent to nearly R2.1bn.
Supply Chain Africa's consumer and industrial businesses performed well, despite poor demand and labour unrest in the retail sector. Also, a number of new contracts were secured from October 2019.
LiebenLogistics and GLS Supply Chain Equipment, acquired from July 3, 2019, performed strongly.
The Supply Chain Africa commodity-facing businesses in South Africa experienced a sharp drop in activity due to electricity generation and transmission problems, and adverse weather conditions. Supply Chain Europe performed poorly, due to less vehicles being made in Germany. German motor vehicle manufacturing levels are at a 23-year low.
The business was being rationalised - one satellite branch would be closed as well as three trans-shipment points, by the end of the year to June 2020, Super Group directors said. Expansion into new areas, such as agricultural equipment distribution and e-commerce platforms, remained a priority.
SG Fleet at its prior year results presentation advised that it had implemented a number of initiatives to shift from upfront to annuity-based income.
At that time, new vehicle sales had also impacted on its novated lease sales and margins.
Fleet Africa delivered a strong performance due to new business generation and renewal of a number of larger contracts.
Dealerships SA saw a further decline in new and used vehicle sales.
Dealerships UK also saw a sharp drop in sales units due to a decline in the Privilege Schemes activity levels as offered by the Original Equipment Manufacturers. Despite this, the business performed well.
In the six-month period, net capital items of R33.4m were incurred against operating profit, with the major item being the impairment of historic goodwill against Phola Coaches of R34.2m.
IFRS 16 also negatively impacted profit by R22.8m at a pre-taxation level. The goodwill impairment also contributed to an increase in the rate of taxation of approximately 0.9percent.
Super Group’s share price fell 0.68percent to R24.99 by yesterday afternoon on the JSE, with the price well off the R36.87 that it traded at on April 23 last year. The share closed 3.38percent lower at R24.31 on the JSE yesterday.