Hudaco Industries, which imports a range of automotive, industrial and electrical products, has strongly criticised the government for its economic policies and its governance failures which it says have been major contributors to the challenging economic conditions and deteriorating living conditions in SA.
In hard-hitting commentary accompanying its results for the year to end-November, Hudaco said on Friday “doing business in SA in 2022 has meant having to deal with, among other things: the government’s malaise, which has manifested itself in rampant corruption now rapidly spreading throughout society, the collapse of critical infrastructure and general ineptitude at organs of state”.
The tougher line taken by Hudaco against the government is a rarity in the SA corporate life and more so among JSE-listed companies, save for organised business and a handful of individual corporate executives.
“We urge the government to put in policies proven internationally, including embracing the rule of law, stamping down on corruption, adopting legislation that encourages businesses to employ more people and ensuring that only competent people are appointed to senior state and municipal positions,” it said.
The criticism highlights the growing frustration among businesses hobbled by frequent power cuts and decaying bulk infrastructure, at municipal level in particular, resulting in higher costs of doing business.
Hudaco's business falls into two primary categories: a consumer-related products segment, which includes items such as batteries, automotive aftermarket parts and electronic security equipment; and an engineering-focused segment, which includes the distribution of electric cabling, plugs and sockets, as well as specialised steel and the engineering parts used by SA’s manufacturing and mining industries.
In between the SA challenges, Huadco was also caught up in the Russia-Ukraine war that further disrupted supply chains during the review period and drove up logistics costs while China’s zero-Covid-19 policy resulted in stock shortages. Its operations are also subject to the rand-dollar exchange rate.
While there has been some international and local easing of supply-chain constraints, the underlying problems remain, Hudaco said, adding that there were still production backlogs in China and that the worldwide shortage of semiconductors and certain raw materials remained, which has had a knock-on effect on many other products.
However, it said that the company had pricing power and could pass the increases on to customers to protect its margins.
Despite the challenges, the company grew its headline earnings per share 22% to R20.07 in the year to end-November. Group turnover was up 12% to R8.1bn and the dividend rose 22% to R9.25 per share.
The share price was up 1.3% to R157 in early trade on the JSE, having risen 63% over the past two years.
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