UPDATE 3-S.Africa's Imperial looks to Africa expansion as it prepares for European exit

  • Reuters
  • Stock Market News
UPDATE 3-S.Africa's Imperial looks to Africa expansion as it prepares for European exit
Credit: © Reuters.

* Group plans expansion in Ethiopia, francophone Africa

* International logistics business seen as non-core

* CEO says uncertainty could slow progress of exit plan (Adds acquisition and expansion pipeline in Africa, fresh quotes and guidance)

By Nqobile Dludla

JOHANNESBURG, Feb 23 (Reuters) - South Africa's Imperial Logistics IPLJ.J is preparing to pull out of its chiefly Europe-focused international business in favour of expansion in Ethiopia and French-speaking Africa, it said on Tuesday after reporting a drop in half-year earnings.

The freight group, which traces its roots to a single car showroom in Johannesburg in the 1940s, said it is exploring an appropriate exit plan for its international business after concluding the operations were non-core to its Africa strategy

"We do not need that business in its current form in order to expand into the continent, and it cannot be integrated," Chief Executive Mohammed Akoojee said.

"The client base, the focus, the type of logistics it is, is very different to what we want to be in Africa."

Current macroeconomic uncertainty could slow progress in exiting the international business, he said.

Akoojee identified Ethiopia and French-speaking countries like Ivory Coast and Cameroon as those in which Imperial wants to set up a physical presence. It plans to distribute goods directly into those countries instead of through partnerships.

Imperial is also looking to grow its Africa logistics business by moving industrial, agriculture and commodity products into the rest of Africa, where it mostly moves consumer and healthcare products.

The expansion comes as the continent seeks to bring together 1.3 billion people in a $3.4 trillion economic bloc known as the African Continental Free Trade Area (AfCFTA), which came into force in January. said Imperial is looking to further expand its market access business in the consumer and healthcare sectors in countries where it has no strong position in those industries.

"We'll execute on that in the next six to 12 months. We are looking at transactions there," he said.

Proceeds from the sale of the international business, which accounts for 41% of group revenue and 28% of group operating profit, will be used for new growth opportunities, he added.

Imperial said earlier on Tuesday that in the six months to Dec. 31, its financial first half, the company's headline earnings per share (HEPS) fell 43% to 180 cents.

It has forecast double-digit growth in continuing HEPS for the full year to June, up from a 65% slump reported in the same period last year.

($1 = 14.6526 rand )

Drop an image here or Supported formats: *.jpg, *.png, *.gif up to 5mb

Error: File type not supported

Drop an image here or