Super Group back on the right side of operating leverage


Super Group back on the right side of operating leverage


Published Date: 2021-06-11 | Source: INCE|Community | Author: The Finance Ghost

Super Group back on the right side of operating leverage

Super Group is a logistics and mobility group, operating businesses in supply chain, fleet solutions and dealerships. The company released a trading statement yesterday, covering an expectation for the year ended June 2021.

Trading statements are never as detailed as full earnings announcements (like MultiChoice and The Foschini Group articles this morning) as they are simply an estimate of the extent to which earnings will differ from the comparable period.

The rule is that a trading statement must be released if earnings are expected to differ by more than 20% from the comparable period. I'm expecting to see many trading statements this year, with the lockdown year as the base against which performance is measured.

Super Group expects revenue to be between 6.4% and 26.5% higher. I was surprised at how wide this gap is, with just a few weeks left in this reporting period. Thanks to fixed costs and the effect of operating leverage, the positive impact on operating profit is much larger (between 20.8% and 46.5% higher).

The really big jump is in profit before tax, expected to be between R1.5bn and R1.8bn vs. R118m last year. There's no point in quoting a percentage - that's at least 13x higher.

The group has given guidance that there have been decent recoveries in businesses like Fleet Solutions and Dealerships UK, along with strong cash management principles applied across the group.

This bodes well for an overall improvement in the balance sheet.


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