End of the beginning, says Imperial boss Mark Lamberti
The group has not decided on unbundling yet, but first restructuring step has been completed
Imperial Group will decide within the next 12 to 18 months whether to go ahead with a "step two" of its restructuring and unbundle the two separate businesses, in logistics and motor, that have emerged from the first round of the process.
Imperial CEO Mark Lamberti said on Tuesday that the group was "not answering the separation question just yet: we want to see how much value can be unlocked within Imperial".
He was speaking after the group’s annual investor day, in which his main message to investors was that the bulk of the major restructuring that the group had embarked on after he had taken over as CEO in 2014 was behind it.
It was "now time to get out there and run the businesses".
Since the second half of 2014, Imperial has sold 42 businesses and 82 properties that, collectively, had R4.4bn of total capital employed. Over the same period, the group has concluded 23 acquisitions of businesses valued at R5.9bn.
"My big job was to reposition Imperial for sustainable growth, with the right assets, the right structure and the right people," Lamberti said. "This is the end of the beginning."
The logistics business came together under its own board and management team on July 1 2016, while the motor vehicle business, renamed Motus, has had its own board and management since January 1 2017.
Imperial was now repositioned as the parent of two strategically focused businesses and would look to achieve the ratings of leading international peers, Lamberti said.
Though there had been market speculation about whether and when Imperial might consider separating the two divisions, no decision in this regard had been taken, he said, with the benefits of the existing structure still to be fully realised.
Lamberti gave much the same guidance on the group’s full-year earnings as he gave at the half-year results in February, despite economic headwinds.
The group expects a single-digit increase in revenues and unchanged operating profit for the year to end-June 2017.
"A significant increase in foreign exchange losses and higher financing costs will, however, depress headline earnings," Imperial said in a Sens announcement on Tuesday. The group now derives 42% of its revenue and 36% of its operating profit from abroad, but Lamberti said this was a function of low growth and high market shares in the country.
Its motor business would need to grow in developed markets — Australia is one — because the new car market in Africa was limited. In logistics, it was happy with its South African logistics business, which would look to small opportunities to grow and would "fly" when the economy picked up, Lamberti said.