Super Group warns of 75% fall in operating profit
The logistics group says the Covid-19 pandemic will result in structural changes to the economy and future business
Transport and logistics company Super Group says it expects operating profit to have declined as much as 75% in the year to end-June, largely due to the performance of its dealership division and fleet business.
The company, which has 48 dealerships in SA and 32 in the UK, said operating profit could fall by between 70% to 75% during the period, from R2.6bn in the previous year. Operating profit was also dragged lower by the performance of its European supply chain business as well as impairments and bad-debt provisions.
The company said it had impaired the carrying values of certain goodwill, intangible assets and properties against its supply chain businesses in Europe and SA, as well as its SA dealerships, by a total of R895m. It said about it had made provisions for R174m in potential bad debts.
Super Group, which offers fleet solutions in Australia, New Zealand, the UK and parts of Africa, said it expected revenue to have fallen between 8% and 10% during the period, from R37.9bn the previous year.
The various national lockdowns applied in SA, Australia, Germany, Spain and the UK, have created significant business disruptions,” with trading being “severely impaired” between March and June, the company said.
It said it recognised that the pandemic would result in structural changes to the economy and future business. “The group has strategically reviewed all businesses and right-sized operations to make sure that business models are relevant and appropriate to current levels of demand.”
“There may still be further cost optimisation and retrenchments in order to reinforce divisional competitive positions and financial performance in the future,” it said.
Super Group expects headline earnings per share (HEPS) to have fallen between 57% and 62% (between 160c and 142c), while it expects to see a loss per share of between 79.4c and 97.4c.
Earnings before interest, taxation, depreciation and amortisation (ebitda) is expected to fall between 32% and 34%, from R3.7bn previously.
The company sees profit before taxation dropping between 93% and 97% from R2.2bn.
Despite the challenging trading conditions, its financial position and cash flow remain strong. Net cash generated from operations is expected to increase between 35% and 40% from R3.14bn in 2019.
Super Group’s full year results are due on September 15.
At 4pm, the company’s share price on the JSE had fallen the most in three weeks, down 3.37% to R18.36, with 2020 losses now amounting to more than 35%.
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