Super Group gets a lift from commodities demand


Super Group gets a lift from commodities demand

Published Date: 2019-02-26 | Source: Stephen Gunnion | Author: Stephen Gunnion

Super Group gets a lift from commodities demand

The logistics group says the continuing strong African commodities environment has helped compensate for a lacklustre consumer demand.

Super Group is benefitting from positive momentum in the commodities cycle, which has provided a cushion as consumer-facing businesses continue to come under pressure. It expects that to remain the case until at least after May's National Election.

Reporting results for the six months to end-December yesterday, the logistics group said the mining commodity industry in Africa experienced another exceptional period with good volume growth. That helped grow earnings at its Supply Chain Africa businesses. Its Digistics business, which procures and distributes food for the Quick Service Restaurant (QSR) industry, also did well due to a number of new contracts. However, it said other consumer businesses in the portfolio were adversely affected by the weak economic growth in SA.

Supply Chain Europe's business was severely impacted by new requirements for European Original Equipment Manufacturers (OEMs) to submit all their vehicles to the Worldwide Harmonised Light Vehicle Test Procedure from last September. This resulted in severe backlogs and declines in vehicle production volumes. Fleet Africa did well due to increased ad hoc volumes on existing contracts but SG Fleet reported disappointing results due to a lacklustre novated lease market as a result of the decline in new vehicle sales.

That said, its local dealership business outperformed national statistics reported by the National Association of Automobile Manufacturers, while in the UK its Ford and Kia dealerships gained market share despite the uncertainty around Brexit and an overall decline in new vehicle sales in the UK.

Super Group now generates 49% of its revenue outside of South Africa, up from 46% in December 2017, but non-SA operating profit has declined to 50% from 62% previously.

For the period under review, group revenue increased by 8% to R19.4 billion and operating profit rose 13% to R1.3 billion. Heading earnings per share came in 12% higher at 174c. It hasn't declared an interim dividend.

Its shares closed 0.9% higher at R34.35.

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