/ 4 June 2009

Imperial eyes dealership turnaround within a year

South Africa’s Imperial Holdings expects its car dealership unit to turn around within a year and will spend the proceeds from the sale of its banking business on boosting its logistics and tourism arm.

Chief executive Hubert Brody told Reuters the 49,9% stake in Imperial Bank that it plans to sell to joint owner Nedbank had a book value of about R1,5-billion, adding the pricing had not been agreed.

He said Imperial, whose activities span logistics, car rental and vehicle retailing, would spend the proceeds on beefing up its logistics and tourism businesses through bolt-on acquisitions and organic growth.

”I don’t know what the pricing will be, but we do recognise our share of net asset value of about R1,5-billion,” Brody said in an interview.

Imperial has been suffering as high interest rates in the past few years hit new vehicle sales and slowed demand for car rental, and has forecast a tough second half after profit fell in the first six months of the year.

But Brody said the new car market in South Africa had ”reached the bottom” after industry sales fell by a less severe 33% year-on-year last month compared with a record 44% dive in April, and forecast a turnaround within 12 months.

”Recent interest rates decreases in South Africa will ultimately flow through into consumer demand … we should start to see the benefit in the next 12 months,” Brody said, referring to the car dealership unit.

Imperial shares gained 1,08% to R59,64 by 09:15GMT, outpacing a flat JSE Mid-cap index. — Reuters