Logistics and supply chain group Imperial Logistics on Tuesday said it expected 2021 revenue, operating profit and headline earnings per share to increase by double digits compared with 2020.
The expected improvement in performance bodes well for its aspirations to grow either organically or through acquisitions in the rest of Africa and other selected markets. In its results for the six months ended December 31, Imperial said it was actively exploring opportunities outside SA.
CEO Mohammed Akoojee on Tuesday said the company would exit the remainder of its international businesses in 2021 to focus on its African operations. As part of the strategy to exit international businesses, the company in 2020 concluded the disposal of its European shipping business, which it sold for R3.4bn. At the time Imperial said it would use the proceeds from the transaction to reduce debt and pursue the opportunities in the rest of Africa.
“Over the past 18 months, we have laid the foundation of our new strategy and are making significant strides in transforming Imperial from a portfolio of regional businesses to an integrated, end-to-end market access and logistics business,” Akoojee said after the release of financial results for the six months to December.
Imperial, which has a market capitalisation of R9.3bn, serves clients working in industries including health care, consumer, automotive, chemicals, industrial and commodities.
“It is our strategic intent to become a One Imperial business and serve as the gateway to Africa to our clients, principals and customers, transforming from an asset-heavy, 3PL logistics player to an innovative, asset-right business,” Akoojee said.
He said the company had spent a year and a half putting a structure in place such that its businesses were integrated. This meant a group business would only sell products and deliver services made by another group business.
Imperial would spend the next two years implementing an integrated information technology system and other integrated systems to make the company fully streamlined.
It would also comprise two businesses: Market Access and Logistics Africa.
The consumer and health-care division, known as Market Access, with annual revenue of more than R12bn, sources, markets, distributes and sells health-care and consumer goods in more than 20 countries including Kenya, Nigeria, Namibia, Mozambique and Ghana. Logistics Africa encompasses logistics activities throughout the African continent, that is road freight, contract logistics and LLP in Africa.
“We have thoroughly assessed the strategic fit of our international portfolio. We have concluded that Logistics International is noncore to our Gateway to Africa strategy and we have therefore decided to explore an appropriate exit plan for this business,” he said.
“The exit plan will relate to the remaining assets in the international portfolio being contract logistics and freight, including Palletways. Given the current macroeconomic uncertainty, this may take time to progress as the objective is to maximise value for shareholders through this process,” Akoojee said.
Group revenue rose 15% to R26.36bn in the reporting period compared with R22.95bn earned in the first half of 2020, as lockdown restrictions eased.
But the company’s operating profit fell 18% to R1.20bn compared with R1.46bn earned in the first half of 2020. Total headline earnings per share were down 3% to 185c per share.
The company declared an interim cash dividend of 83c per share compared with 167c for the first half of 2020.
Imperial’s share price closed 2.57% lower at R45.06.
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