Imperial Logistics expects double-digit profit growth in 2020

Imperial Logistics says it expects double-digit operating profit in the year to end-June 2020 due to a strong pipeline of new contract opportunities.

New business revenue of about R5.5bn was secured on a rolling 12-month basis to the end of September 2019, the company said. It is in the process of intensifying its focus on SA and the rest of Africa. Headline earnings per share (HEPS) are also expected to grow by double digits during its full 2020 year.

New acquisitions, restructuring and cost-cutting measures were also set to boost the group’s performance, though weak economic conditions have persisted in SA, it said.

The company has been pursuing a rationalisation strategy, exiting unprofitable contracts, consolidating operations and properties and cutting costs.

Once-off costs related to these processes had prompted a 9% fall in operating profit to R2.5bn in the company's year to end-June 2019, although it said excluding those effects, operating profits from continuing operations would have fallen only 1%.

Imperial Logistics also impaired the value of goodwill of its consumer packaging group during the year by about R1.1bn owing to the “significant deterioration in macro-economic conditions in all three divisions, which include a depressed growth outlook, uncertainty” and higher capital costs in certain markets.

The group said on Wednesday profitability in the group’s European shipping business improved, but conditions remain challenging, while a strong performance was seen in South America.

The company's automotive business also benefited from new contracts, and improved pricing, it said.

Imperial plans to dispose of its European and South American shipping business, saying on Wednesday this was expected to be concluded in coming months.

At 1pm the JSE-listed logistics group’s share price had jumped 3.76%% to R54.94. The group has lost 19% in the year to date.

gernetzkyk@businesslive.co.za