SA infrastructure challenges weigh on Super Group’s earnings
In SA, weak rand, persistent electricity and water supply problems, and rail and port infrastructure challenges hamper growth, the company says
11 September 2024 - 08:34
by Jacqueline Mackenzie
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Super Group has reported a 26% decline in annual headline earnings as geopolitical uncertainties and infrastructural challenges in SA placed significant pressures on both revenue generation and operational cost structures.
The logistics and fleet solutions group reported headline earnings per share (HEPS) of 353.8c for the year to end-June, down 25.9% from a year ago.
Revenue increased by 4.6% to R64.9bn, benefiting from the weakening rand and strategic acquisitions in the UK and SA, it said in a statement on Wednesday.
Despite this revenue growth, earnings before interest, tax, depreciation and amortisation (ebitda) declined by 1.4% to R8.45bn and operating profit fell by 5.6% to R3.79bn, mainly due to weaker performances in the European supply chain businesses and the UK-based dealerships business.
In SA, a weak rand, persistent electricity and water supply problems, and rail and port infrastructure challenges hampered growth, it said.
In Europe, conflicts in the Ukraine and Middle East remain the primary obstacles to growth, intensifying the rise in food and energy prices.
Though the results reflected the difficult trading environment, the group, which was valued at R9.4bn on the JSE, recorded notable new client wins, contract renewals and increases in market share.
The business had done well in growing market share across its Southern African supply chain and dealership operations, it said.
“The group’s operations span various geographies, industries and currencies and this diversification has been instrumental in managing market volatility,” it said.
Super Group’s revenue and operating profit contributions from its non-SA businesses were 56% and 54%, respectively.
It declared a final dividend of 60c per share, down from 80c a year ago.
Super Group operates a network of vehicle dealerships and several mobility solutions across SA, the UK, Europe and Australasia.
Business Day reported on August 12 that the group said SA’s logistics constraints were making domestic hauliers less competitive as copper exports destined for the key Chinese and Middle East markets were diverted from Durban to Walvis Bay and Dar es Salaam.
Super Group joined a plethora of companies that have lamented the decay of SA’s third-largest city and the subsequent effects and losses incurred. As a trading link to the Far East, Middle East, Australasia, South America, North America and Europe, Durban is a crucial hub for the Southern African region
Poor Transnet service, characterised by incessant bottlenecks and backlogs at SA’s main port, has seen neighbouring ports including Maputo expand quickly in recent years to meet growing demand from the region’s expanding economy
Looking ahead, the group was optimistic that potential rate cuts and moderating inflation would ease the cost-of-living pressures on consumers, but expected macroeconomic and infrastructural challenges in the year ahead.
Poor coal export volumes, border delays and slow turnaround times at SA ports would continue to hamper growth in the industrial and commodity transport businesses.
The copper export volumes lost to Dar es Salaam and Walvis Bay were unlikely to be fully recovered in the short term though it hoped that some efficiency improvements would be realised from February 2025, it said.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
SA infrastructure challenges weigh on Super Group’s earnings
In SA, weak rand, persistent electricity and water supply problems, and rail and port infrastructure challenges hamper growth, the company says
Super Group has reported a 26% decline in annual headline earnings as geopolitical uncertainties and infrastructural challenges in SA placed significant pressures on both revenue generation and operational cost structures.
The logistics and fleet solutions group reported headline earnings per share (HEPS) of 353.8c for the year to end-June, down 25.9% from a year ago.
Revenue increased by 4.6% to R64.9bn, benefiting from the weakening rand and strategic acquisitions in the UK and SA, it said in a statement on Wednesday.
Despite this revenue growth, earnings before interest, tax, depreciation and amortisation (ebitda) declined by 1.4% to R8.45bn and operating profit fell by 5.6% to R3.79bn, mainly due to weaker performances in the European supply chain businesses and the UK-based dealerships business.
In SA, a weak rand, persistent electricity and water supply problems, and rail and port infrastructure challenges hampered growth, it said.
In Europe, conflicts in the Ukraine and Middle East remain the primary obstacles to growth, intensifying the rise in food and energy prices.
Though the results reflected the difficult trading environment, the group, which was valued at R9.4bn on the JSE, recorded notable new client wins, contract renewals and increases in market share.
The business had done well in growing market share across its Southern African supply chain and dealership operations, it said.
“The group’s operations span various geographies, industries and currencies and this diversification has been instrumental in managing market volatility,” it said.
Super Group’s revenue and operating profit contributions from its non-SA businesses were 56% and 54%, respectively.
It declared a final dividend of 60c per share, down from 80c a year ago.
Super Group operates a network of vehicle dealerships and several mobility solutions across SA, the UK, Europe and Australasia.
Business Day reported on August 12 that the group said SA’s logistics constraints were making domestic hauliers less competitive as copper exports destined for the key Chinese and Middle East markets were diverted from Durban to Walvis Bay and Dar es Salaam.
Super Group joined a plethora of companies that have lamented the decay of SA’s third-largest city and the subsequent effects and losses incurred. As a trading link to the Far East, Middle East, Australasia, South America, North America and Europe, Durban is a crucial hub for the Southern African region
Poor Transnet service, characterised by incessant bottlenecks and backlogs at SA’s main port, has seen neighbouring ports including Maputo expand quickly in recent years to meet growing demand from the region’s expanding economy
Looking ahead, the group was optimistic that potential rate cuts and moderating inflation would ease the cost-of-living pressures on consumers, but expected macroeconomic and infrastructural challenges in the year ahead.
Poor coal export volumes, border delays and slow turnaround times at SA ports would continue to hamper growth in the industrial and commodity transport businesses.
The copper export volumes lost to Dar es Salaam and Walvis Bay were unlikely to be fully recovered in the short term though it hoped that some efficiency improvements would be realised from February 2025, it said.
With Michelle Gumede
mackenziej@arena.africa
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