HILTON TARRANT: Logistics company Super Group reported results for the six months to December today. with revenue up 31% to R7.1bn. Operating profit up 26%, headline earnings per share up 27% to 121c.
Peter Mountford is chief executive of Super Group and joins us now. Peter, in your commentary to the results today you term this set of numbers as “excellent”. Is this as good as it gets, given that you do cite the competitive trading environment here as well as in Australia – you cite the strenuous economic conditions being experienced by all industries in both of those countries.
PETER MOUNTFORD:Hilton, I think we remain cautiously optimistic towards the future, but there’s no doubt that particularly in South Africa there are some pretty serious headwinds. I think consumer spending is under pressure, the impact clearly of foreign exchange declines is going to be significant in terms of fuel costs and the like. And you also have the impact of e-tolls and those sort of things coming through in Gauteng. So hopefully it’s not as good as it gets, but there’s no doubt there are headwinds, particularly in the South Africa environment.
HILTON TARRANT:What has the impact of e-tolls been on your business?
PETER MOUNTFORD:It’s fairly significant. Like most of our competitors we can pass on statutory costs on a lot of contracts. Where we can’t it is significant, the costs themselves are significant and so is the administrative burden involved in managing the whole e-toll accounting.
HILTON TARRANT:So you are really being hit from all sides here in South Africa – subdued consumer environment, higher fuel prices, higher input costs, e-tolls. The bright spot though in these numbers is the Africa logistics business. This is really roaring from strength to strength.
PETER MOUNTFORD:Ja, that has been very good. First of all, I think we’ve benefited from the replacement programme of the truck fleet – and that in those operations over the past two years. But we’ve also diversified a lot there. We were primarily a flat-deck orientated fleet. We’ve now got over 100 fuel tankers running in those environments and we’ve moved into different trailers…and the like. So the business has benefited from that. But, as you say, off perhaps a relatively modest base that was the star performance for us in the last six months.
HILTON TARRANT:Will this be a big area of focus in the next 12, 18, 24 months?
PETER MOUNTFORD:Yes, definitely. Those environments are looking optimistic and I think there is capability to expand further than where we are currently strong. We are fairly strong in the Zimbabwe, Zambia, Malawi and DRC environment, and I think there are opportunities further afield on that as well.
HILTON TARRANT:Your dealerships business here in South Africa. Vehicle sales across the country were flat in the last six months of last year, 0.7% growth year on year. But you grew sales by 8.2%, comfortably ahead of the market. How are you reading that space at the moment?
PETER MOUNTFORD:Ja, I think our sales performance was absolutely excellent. I think in terms of pre-existing dealerships we grew new car sales by 7.8% and there was a 0.4% impact of two new dealerships. And that is obviously an excellent performance in relation to the NAAMSA statistic. There’s no doubt. As you’ve seen in the last two months of NAAMSA statistics some pressure there. We hope to be able to sustain that performance into the future. And certainly one of the benefacting elements has been that we introduced a service differentiation ,an excellence programme, so we’ve had good contributions coming from our maintenance carpark-type environment as well as financial services, insurance and the like. So hopefully we’ll sustain that into the future, although you can see the type of pressure on new car sales at the moment.
HILTON TARRANT:Speaking of sustaining that performance, the overall outlook for the group for the next six months?
PETER MOUNTFORD:I think without getting into a forecast we are cautiously optimistic. We are worried about exchange rates, we are worrying about consumer spending. We are seeing very little growth in consumer volumes in our fast-moving consumer goods distribution businesses. So, as I say, there are certainly some challenges in front of us.
HILTON TARRANT:And opportunities in the supply-chain business to perhaps attack one or two niches.
PETER MOUNTFORD:Yes, very different, there is definitely that. We are putting a strong emphasis on organic growth. I think we picked up quite a lot of new business in the last six months and I think the prospects in the South African supply-chain environment are excellent.
HILTON TARRANT:Thanks to Peter Mountford. I must disclose that I do hold some Super Group shares, David, having bought them ages ago – just a handful, but nonetheless they are a very good performer.
DAVID SHAPIRO:I must disclose I’m a holder of Imperial and I just hope Imperial have got similar kind of growth into Africa, because I think they are under a lot of pressure. We’ve seen their price come down. But this is a great result, and all credit to Peter for having turned around the company. Today it’s a serious business and well structured, well funded. I thought it was an exceptional result in a difficult time.