Hudaco hints of better second half after Covid-19 hit
The group expects profit to fall as much as 24% in its year to end-December, but appears to have bounced back from a torrid first half
Hudaco Industries, an importer of automotive, industrial and electrical products, says it expects profits to fall more than a fifth in its 2020 year, but appears to have seen an improved performance in its second half after a severe hit from Covid-19.
Headline earnings per share (Heps) are expected to be between R10.25 and R10.75 in the year to end-November, the group said in a trading update on Wednesday. That is a drop of up to 24% but is an improvement from the 63% fall in Heps it reported for its half year.
Hudaco's business falls into two primary categories: a consumer-related products segment, which includes items such as batteries, automotive aftermarket parts and security equipment; and an engineering-focused segment, which includes diesel engines and specialised steel as well as other engineering parts used by SA’s manufacturing and mining industries.
Consumer-related products make up about two-thirds of sales. In June 2020, the group reported an “overwhelming impact” of Covid-19 in the last part of its six months to end-May, when many of the group’s customers were unable to operate as essential services.
In December 2019, load-shedding caused many of Hudaco’s customers to close for the Christmas break a week earlier than normal and many opened a week later than usual in January, it said at the time. February trading was back on track, with the group reporting “an excellent month”, before Covid-19 became a major concern in March.
The group generated R429m in headline earnings in its 2019 year, a widely used profit measure that excludes one-off items, up 5.1% from 2018, which was achieved in spite of SA’s subdued economic environment, the group said at the time.
In morning trade on Wednesday Hudaco’s share was up 5.15% to R88, having fallen 10.83% over the past 12 months, and giving the group a market capitalisation of R2.91bn.