South African diversified transport and logistics group Imperial increased first-half headline earnings per share by 21% and said on Wednesday it saw good full-year earnings growth.
The group also said chief executive officer Bill Lynch will leave on November 1 and that the board is now looking for a new CEO.
A buoyant economy drove sales in its motor vehicle distribution and retail operations 22% higher due to strong consumer spending. Demand was driven by affordability, a growing urban middle class, and a poor public transport system.
Imperial said a 2% rise in the overdraft rate since June last year slowed vehicle sales somewhat, while the rand, at 11% weaker to the dollar and 18% weaker to the euro compared to the first-half of 2006, hurt import costs.
Imperial’s headline EPS — the key profit measure for South African firms and excludes non-trading, capital and certain extraordinary items — rose 21% to R7,49.
”Despite recent and expected further interest rate increases and although consumer spending is showing signs of cooling down, Imperial expects sales growth to continue, as the fundamental factors driving vehicle demand remain firmly in place and the emergence of first time buyers continues,” Imperial said.
A weaker rand would however provide strong impetus to the group’s aviation and tourism operations, it added.
Outgoing CEO Lynch underwent surgery last year, and resumed his post after recovering, but Imperial created the position of deputy chief executive to assist him with his role, appointing financial director Hafiz Mohamed to that post.
Mohamed has declined to be considered for the top post at the group which runs aviation, vehicle and forklift leasing, fleet management, car imports and sales, car rental, tourism and insurance units, with operations in the UK and Europe.
Shares in Imperial slid 1,97% to R159,39, underperforming a 1,88% fall in the blue chip Top-40 index, which tumbled as part of a global markets rout as China’s equity market sell-off fanned concerns about equity valuations there and data showed US economic growth may slow.
Imperial’s revenue was up 29% to R33,4-billion, while operating profit was up 17% to R2,5-billion, with the strongest contributions coming from the leasing, motor dealerships and insurance divisions.
Investment in capital expenditure and acquisitions amounted to R2,477-billion, 11% higher than last year. – Reuters