Imperial Logistics expects lower earnings as it impairs SA assets
The company says that the state of SA’s economy and rising competition has led it to intensify efforts to restructure and rationalise its operations
Imperial Logistics says earnings will probably fall in the year to end-June as it writes down the value of its consumer packaged goods business in SA by up to R1.4bn.
Imperial said that given the state of SA’s economy and rising competition, it intensified efforts to restructure and rationalise its operations in the country by exiting unprofitable contracts, consolidating operations and properties, and cutting costs.
But its consumer packaged goods business — which accounts for a fifth of revenue in SA — continues to be loss-making, it said.
Imperial said it planned to “exit” assets and shift key contracts to other business units “under a different commercial model”.
“This significant step does not represent our exit from the consumer industry [segment] in SA, but only the rationalisation of the multi-principal distribution capability that has become unviable,” it said.
Imperial would impair the consumer packaged goods unit by between R1bn and R1.4bn net of tax, including provisions for retrenchments, and the business would be classified as a discontinued operation for the financial year to end-June 2019.
The group said it produced “an unsatisfactory performance” for the nine months to end-March.
Revenue from continuing operations rose but operating profit fell, it said.
For the full year to end-June, revenue was expected to rise but headline earnings per share (HEPS) would decline because of a weaker operational performance in SA and abroad, and one-off costs from the “business rationalisation and restructure” process.
“The far-reaching benefits of the portfolio rationalisation and organisational restructure that we undertook more than four years ago and continue in financial year 2019, new contract gains, removing and reducing complexities and costs significantly in all businesses, and enhanced strategic focus will be realised in the 2020 financial year,” the group said.
Imperial’s shares were 6.8% down at R56.09 in early trade on Monday.