Invicta, Christo Wiese’s industrial holding company, is considering investing in SA again after last month’s election that produced a hung parliament and caused the ANC to form a government of national unity (GNU).
This is as the group achieved its target of generating more than half of its earnings outside SA with it now eyeing growth opportunities in the US and the rest of Africa.
The group’s CEO, Steven Joffe, said that with the GNU unfolding, Invicta would also look favourably at investment opportunities in SA, where it did not see it previously.
“We quite like the sectors we play in,” Joffe told Business Day, referring to the capital equipment, replacement parts industry, automotive and earthmoving segments it participates in. “We ... are just building them out now geographically and sectorally and we want to grow the contributions from all the different sectors.”
Listed on the JSE in 1989, Invicta provides industrial consumables, equipment and spare parts worldwide. It is valued at about R2.7bn on the bourse.
In recent years, Invicta has been applying a strategy of expanding into regions outside SA to generate its income as local issues such as load-shedding, a struggling economy and, most recently, problems at ports hampered its SA businesses.
Joffe signalled a change in this stance saying that in SA the company was encouraged by the suspension of load-shedding and by the election results. He said Invicta was hopeful that the GNU would implement policies that would allow the industry to grow.
“It’s not that we didn’t look at SA, but we will be looking with more interest,” said the CEO. “It’s not that we were negative on SA but it’s just that we couldn’t see any opportunities for growth.
“Hopefully, we are going to see some positive growth in mining, hopefully we will see a good agricultural outlook and industrial manufacturing capacity. We’d also love to see some construction developments,” he said.
Flat earnings
Invicta reported flat earnings for the year ended March. Revenue grew 7% year on year to R8.3bn and gross profit margin increased 0.5% to 33%. Profit was flat at R584.1m, delivered from improvements in net finance income from financing transactions and net foreign exchange of R4m and R38m, respectively.
Headline earnings per share were down 4% at 470c. A dividend of 105c per share was declared, the group said in a statement on Monday. Operating profit before net finance income from financing transactions and foreign exchange movements was R31m higher. Cash generated from operations increased 28% to R818m.
The group concluded numerous acquisitions in the year, including a stake in UK-based Imexpart for £4.7m in July 2023. It distributes a wide variety of truck and bus parts for DAF, Mercedes, Volvo, MAN, Iveco, Renault, Scania and Cummins engines and carries a full range of replacement parts including bumpers and step panels for trucks.
Invicta also acquired a controlling interest in Zhejiang Beienji Industrial Products for no consideration after a buyback and cancellation of shares from existing shareholders by BMG China, which increased Invicta’s shareholding in BMG China from 40% to 91.74%.
Selling, administration and distribution costs were 10% higher. The inclusion of Imexpart, which was acquired during the current financial year, contributed 4% to the base cost.
Asset impairments
The group took asset impairments of R22m compared with R1m the year before. Excluding Imexpart and asset impairments, selling, administration and distribution costs increased 4% reflecting ongoing good cost management under the economic circumstances.
Joffe said Invicta’s new acquisitions would add “quite nicely” to its value creation bid.
Meanwhile, management continues to evaluate potential acquisition opportunities in numerous countries, including the US and the rest of Africa.
“America has huge growth opportunities. We’ve got a few branches in America and we can probably roll out many more branches of our product offering ... we are looking at growing that significantly,” said Joffe.
“We constantly get good opportunities in Africa,” he said. “There are certain pockets in Africa like Zambia where things are going well and we think we can build out a bigger distribution network there.”
Invicta shares closed 0.89% lower at R27.75 on Monday, having climbed nearly 8% in the past three years.
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