COVID-19 derails Imperial’s full-year earnings

Imperial Logistics, a major player in the logistics industry, has reported a significant 65% drop in full-year earnings, largely attributed to the adverse effects of the COVID-19 pandemic on its revenue streams, impairments, and restructuring efforts in South Africa. The group has taken a cautious approach by refraining from paying dividends as sales volumes dipped across all regions. Mohammed Akoojee, CEO of Imperial Logistics, emphasized the challenges the company has faced and the strategies being implemented to navigate through these uncertain times. Akoojee highlighted the varying impacts of the pandemic on their operations in different regions, noting a substantial decline in earnings primarily in their international business. The revenue impact of COVID-19 amounted to approximately 4 billion rand, with operating profits taking a hit of 1 billion rand. Despite these challenges, Akoojee expressed optimism about the gradual recovery being witnessed as the lockdown restrictions ease. In South Africa, the resumption of operations in industries such as tobacco and liquor has led to a return to normalcy in domestic markets. However, the recovery in the international business remains slower, particularly in sectors like automotive, which are not expected to normalize before 2022. Akoojee emphasized the resilience of the business in essential sectors like pharmaceuticals and consumer goods, which have continued to perform well even during the peak of the pandemic. Looking ahead, Imperial Logistics plans to closely monitor the economic recovery and trading conditions before considering the resumption of dividend payments in February next year. Akoojee underscored the importance of government initiatives aimed at revitalizing the economy, particularly in South Africa, where collaborative efforts between business, labor, and government are crucial for driving growth. He acknowledged the challenges posed by the lack of stimulus packages in Africa compared to Europe but remained positive about the long-term prospects for the continent. Imperial Logistics has capitalized on new business opportunities, securing 6.2 billion rand in revenue across various regions. The company's market access business, which facilitates access to fast-growing consumer markets, has shown resilience and is expected to remain a key driver of growth. Additionally, the European business has seen a positive trajectory following stimulus packages, particularly in countries like Germany. However, the risk of a second wave of infections and subsequent lockdowns in Europe poses a potential threat to the recovery. Akoojee also highlighted the potential benefits of the African Continental Free Trade Area in creating opportunities for logistics companies and driving economic growth on the continent. Imperial Logistics is optimistic about the future outlook for Africa and has positioned itself strategically to leverage the evolving market dynamics, especially in sectors like consumer goods and healthcare.