The impact of the introduction of e-tolling on Gauteng freeways has been “huge and significant” to the operations of transport logistics and mobility company Super Group.
Peter Mountford, the chief executive of Super Group, said yesterday the implementation of the e-toll system would have a negative impact on all areas of the group’s business and continued to be of concern in relation to distribution costs and the knock-on effect on gross domestic product (GDP).
Mountford said e-toll costs were capable of recovery in many of the group’s core supply chain contracts but with some operations it was not in a position to recover these costs.
He added that e-tolling had dramatically affected the group’s administrative costs, particularly because of the inordinate complexity of the system. He said Super Group had to be aware of fraud with “false number plates and the like going through the system and you need a coherent process to deal with that and it all costs money”.
Mountford admitted the group had to employ people to specifically manage and deal with the complexity of the system, which was a big negative for the group.
Super Group reported yesterday that revenue grew 31.5 percent to R7.1 billion in the six months to December from R5.4bn in the previous corresponding period.
He attributed the revenue growth largely to the excellent performances by the majority of the Supply Chain South Africa businesses, the African Logistics and Dealerships operations and the inclusion of Safika Oosthuizens for the full period.
Operating profit improved by 25.7 percent to R650.6 million from R517.4m. This translated into a 30 percent growth in adjusted headline earnings a share to R1.259.
Super Group’s stated strategy remains to use cash generated to invest in acquisitions or repurchase shares, resulting in it not declaring a dividend.
Mountford said earnings growth was commendable given the highly competitive trading environment and strenuous economic conditions experienced by all industries in both South Africa and Australia.
He said the transport and logistics industry in South Africa was affected by underlying factors such as weak consumer expenditure, challenges faced by the mining sector and the above-inflation cost increases being experienced by the local industrial sectors.
Cash generated from operations, after working capital, increased by 25.5 percent to R760m in the period.
Mountford said the group had exposure to the mining industry through its bulk operations and labour disruptions had affected performance but it tried to keep the volumes going and accelerate volumes when there was stability.
The vehicle dealerships division increased revenue by 18 percent to R2.6bn and operating profit by 28 percent to R70.7m despite the seven-week strike in the motor sector that disrupted vehicle supplies to dealerships. The gains were largely because it took on stock ahead of the strike.
Mountford said the outlook for the local economy was subdued given the low GDP growth reported over the past 12 months, uncertain trading and operating prospects in manufacturing, and production contraction in the industrial and mining industries.
“The weak rand, interest rate hikes, higher fuel prices, inflationary pressures and high unemployment rates will continue to hamper growth.”
The shares fell 0.93 percent to R26.70 on the JSE yesterday.
By Roy Cokayne
This article appeared at www.iol.co.za