Super Group, a fleet and logistics solutions provider, has warned that may implement further cost optimisation and retrenchments as part of a strategic move to right-size the business.
The group said in a trading update on Tuesday (25 August), that it expects revenue for the year ended June 2020, to be between 8% and 10% below the prior year’s revenue of R37.9 billion, mainly due to the tough trading conditions experienced across all its operations.
“Some of these trading conditions pre-existed, but were severely exacerbated by the onset of the Covid-19 pandemic at the beginning of the fourth quarter of the financial year ended 30 June 2020,” it said.
Super Group said it expects basic headline earnings per share to decrease by between 57% (160.7 cents) and 62% (142.0 373.8 cents cents).
Earnings before interest, taxation, depreciation and amortisation for the financial year is expected to decrease between 32% and 34% from R3.7 billion reported in the prior year.
Super Group has impaired the carrying values of certain goodwill, intangible assets and properties, mainly against Supply Chain Europe (inTime) of R599 million, Dealerships SA of R184 million and Supply Chain Africa of R112 million.
In addition, provisions for potential bad debts of approximately R174 million were raised, the group said.
Operating profit is expected to be down by between 70% and 75% from R2 606 million in the prior year. The major contributors to this negative variance being the performances of Dealerships SA and UK, SG Fleet and the Supply Chain Europe businesses, worsened by the impairments and bad debt provisions detailed previously, it said.
The Super Group Dealerships division in South Africa consists of 48 dealerships.
“Super Group recognises that the Covid-19 pandemic and related lockdowns will result in long-term social-economic shifts and structural changes to the economy and business in general. The group has strategically reviewed all businesses and right-sized operations to make sure that business models are relevant and appropriate to current levels of demand.
“There may still be further cost optimisation and retrenchments in order to reinforce Divisional competitive positions and financial performance in the future,” it said.
It said that Covid-19 continues to have an impact across the group’s operations, and therefore contingency plans remain critical to operational success over the next six months.