Super Group buoyed by commodities, new acquisitions

27th August 2018 By: Irma Venter - Creamer Media Senior Deputy Editor

Super Group buoyed by commodities, new acquisitions

Peter Mountford

An excellent performance from the commodities businesses within Supply Chain Africa, good contributions from a number of acquired businesses and solid results from the SG Fleet have seen Super Group post a 15% jump in operating profit, to R2.4-billion, for the financial year ended June 30.

Revenue was up 19%, to R35.7-billion.

CEO Peter Mountford said on Monday that Super Group managed a “stellar performance” despite challenging circumstances.

“The South African consumer business operated in an environment characterised by poor consumer demand and competitive trading conditions.”

Mountford said the mining industry in Africa experienced an excellent year with good volume growth.

“However, our consumer-facing and industrial operations in South Africa faced serious headwinds such as the VAT increase, fuel price hikes, high price inflation and increasing unemployment levels.

“The European and UK economies also faced a number of challenges and uncertainties arising from the protracted Brexit negotiations.”

He added that the Australian economic climate had improved towards the end of the first half of the financial year, with conditions remaining above average for the rest of the period.

Super Group, continuing its strategy of geographically diversifying its revenue stream, reported revenue and operating profit from its non-South African businesses of 47%, up from 40% in June 2017, and 60%, down from 61%, respectively.

Mountford said the group had mixed views on the prospects for its businesses in the new financial year.

“Locally, despite new political leadership, policy uncertainty remains extremely negative and there is still no indication of economic stimulus or encouragement of investments.

“South African consumers are under even more pressure and, therefore, we expect the low growth rates to persist.

“The medium-term outlook for the rest of Africa remains subdued for consumer-facing industries and growth prospects in the supply chain industries continue to be weighed down by margin pressure on the back of severe competition and poor consumer demand.”
In Australia, demand for higher value-add solutions in the freight management logistics market continues, as well as for management services for electric fleets.

Telematics and driver safety applications were, likewise, growing steadily.

The New Zealand economy had also seen a relatively lengthy period of strong growth.

“There was some improvement in the economic climate in the UK during the year, which was reflected in an uptick of interest in tool-of-trade, particularly light commercial vehicles, salary packaging services, and personal contract hire,” noted Mountford.

“The UK dealership market seems to be stabilising despite continuing uncertainty regarding the potential Brexit outcome.

"In Europe, Germany, with its high employment rate, remains a challenge in terms of driver shortages in the SG inTime business.

“The US trade wars, together with the Brexit outcome uncertainty, plagues the European market and continues to be a concern.”