Imperial Holdings share drops on ‘muted guidance’
BUSINESS LIVE / 30 OCTOBER 2018 - 22:26 / SISEKO NJOBENI
The transport and logistics firm expects a muted performance from its logistics business
Imperial Holdings slipped more than 7% in early JSE trade on Tuesday after the transport and logistics group issued what one analyst said was a muted guidance for its logistics business.
At close of trade, the share price was 6.83% down at R15.89.
Imperial Holdings acting CEO Mohammed Akoojee. Picture: FREDDY MAVUNDA
Imperial — which is in the final stages of separating its logistics and automotive businesses — said a combination of high unemployment, negative economic growth, VAT increases and fuel price rises weighed heavily on its logistics business.
As a result, reduced volumes and depressed consumer demand affected the Imperial Logistics performance in the first quarter of the 2019 financial year, Imperial said in an update after its annual general meeting (AGM). Imperial Logistics generates 32% if its revenue in SA.
Imperial said Imperial Logistics’s revenue and operating profits for the first six months of the 2019 financial year would be flat, compared with those of the previous matching period.
Mark Hodgson, an analyst at Avior Capital Markets, said on Tuesday that the muted financial guidance for Imperial Logistics was probably the main reason for market disappointment.
“The Imperial trading update was overall relatively muted ahead of the expected unbundling of (Imperial’s automotive business) Motus later (this month),” Hodgson said.
Imperial said Motus performed satisfactorily in the first quarter. The group attributed that to higher prices and high volumes of entry level and small sport utility vehicle (SUV) sales in SA as consumers traded down from luxury vehicle brands.
Imperial said the automotive business was expected to increase revenue and operating profit in the first half of the current financial year.
At the AGM, 48.16% of the group’s shareholders rejected the company remuneration policy. The group said it was taking steps to reach out to the shareholders who voted against the policy. It has asked them to make written submissions by no later than November 9.
Imperial also announced investor relations and corporate advisory firm Afropulse as its black economic empowerment (BEE) partner in a R200m transaction. In terms of the deal, Afropulse would acquire 25% in a yet-to-be formed vehicle that will house Imperial Logistics’s energy, mining and chemicals businesses.
The yet-to-be formed company’s core business will be bulk road transportation management of liquids, gases, powders, ores and grains with road tankers and tippers. The group said it expected the deal to be implemented by the end of the third quarter of the current financial year.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER