Super Group slowed down by tough conditions


Super Group slowed down by tough conditions

Published Date: 2020-02-11 | Source: Stephen Gunnion | Author: Stephen Gunnion

Super Group slowed down by tough conditions

The logistics and supply chain group has been impacted by the weak local economy and a big decline in German car making.

Super Group will report its first decline in revenue and earnings in 11 years due to the deteriorating local economy and political uncertainty in the UK and Europe. It says load shedding and a change in the product offering from SG Fleet also impacted its performance.

In a trading statement, the logistics and supply chain solutions group said revenue for the six months to end-December would be around 3% below the R19.4 billion reported in the comparative period, while operating profit was likely to be 8.7% lower. It expects to report a decline in earnings per share (EPS) of as much as 19.9%, while headline EPS are likely to be down by between 10.8% and 13.7%. Earnings were also diminished by goodwill impairments and the adoption of the new IFRS 16 accounting treatment of leases.

The group said it had been negatively affected by extremely difficult trading conditions in all the geographies it operates in. In SA, weak growth was exacerbated by a very competitive environment. Its commodity-facing businesses experienced a sharp decline in activity levels due to electricity generation and transmission problems as well as bad weather conditions, particularly during November and December. However, LiebenLogistics and GLS Supply Chain Equipment, bought last July, performed strongly in the six months to end-December.

In Germany, a decline in new vehicle manufacturing volumes to the lowest in 23 years affected its Supply Chain Europe division. However, it's closing some branches and trans-shipment points and plans to expand into new business areas such as agricultural equipment distribution and e-commerce to help support the business.

At SG Fleet, it shifted from upfront to annuity-based income as it implemented a number of strategic initiatives to improve the business, which has been impacted by a decline in new vehicle sales. Dealerships SA was also impacted by falling car sales in SA.

Fleet Africa bucked the negative trend over the period, delivering a strong performance due to new business generation and the renewal of a number of larger contracts.

Its shares fell 3.4% to R24.31 yesterday.

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