Super Group’s shares tumble as it warns of lower earnings ahead

Super Group’s annual results are expected out on September 11. Photo: Supplied

Super Group’s annual results are expected out on September 11. Photo: Supplied

Published Aug 13, 2024

Share

Shares in Super Group plunged nearly 13% after it said yesterday that its annual headline earnings per share (heps) could fall as much as 30% amid a challenging trade environment.

By 4.30pm its shares were12.66% lower at R25.80.

In a trading statement and operational update, it said a review by management of the year-end financial results for the 12 months ended June 30, 2024 has indicated that projected heps would decline by between 20% to 30% to between 334.2 cents and 382 cents per share.

This as earnings per share were likely to fall between 94% and 104% in a range of between a loss of 19.2 cents per share to 28.9 cents per share.

Projected revenue was expected to rise between 0% to 10% to between R62 billion to R68.2bn, while operating profit was expected to decline by between 0% and 10% to a range of between R3.62bn to R4bn.

The group’s annual results are expected out on September 11.

Super Group said, “Geopolitical tensions, supply chain disruptions and higher-for-longer interest rates have exacerbated cost-of-living pressures on already strained consumers. These pressures may be reduced gradually due to moderating inflation and potential rate cuts, but little consumption expenditure growth is expected in the short to medium term.”

The conflicts in the Ukraine and Middle East remain the primary obstacles to growth, intensifying the rise in food and energy prices. Following a decline in economic activity in 2023, the German economy continued to stagnate in 2024.

In South Africa, a weak rand, load shedding and heightened operational challenges in rail and port infrastructure hindered growth severely.

Its Supply Chain Africa division’s performance was negatively impacted by a significant decrease in coal export volumes, border delays, and slow turnaround times at South African ports.

“The vast majority of copper exports bound for China and the Middle East are being rerouted from Durban to Dar es Salaam and Walvis Bay. Both ports have invested in major upgrades of handling equipment and security, increasing capacity and benefiting from a surge in copper exports,” it said.

The loss of southbound volumes had made South African hauliers less competitive, resulting in lower revenues and margins across the Supply Chain division. Prevailing cabotage laws also impact both South African and Zimbabwean hauliers operating into Dar es Salaam, in particular.

In shipping, cabotage law refers to regulations placed on foreign-flagged ships operating in the domestic waters of a country, and providing services such as transporting cargo or passengers from one port to another within that country.

Bad debts in the Super Group’s coal operations resulting from financially distressed coal mining customers, including Wescoal Mining had been incurred, negatively impacting profitability within these businesses.

Meanwhile, the performance of Supply Chain Europe, which comprises the activity of the German express provider inTime, was negatively impacted by a sharp decline in European automotive parts distribution volumes and a substantial erosion of gross margins due to excess vehicle capacity across Germany.

The carrying value of inTime’s goodwill/intangible assets had been impaired by €59.7 million (R1.21bn) in the second half of the year.

“The rightsizing of inTime Germany is progressing as planned and should result in a significant improvement in the financial performance of this business in the forthcoming financial year,” the group said.

Looking at dealerships UK, Super Group said ongoing supply issues resulted in a notable decline in Ford volumes and market share.

“Ford’s decision to discontinue a best-selling models materially impacted sales performance and there have been further delays in the release of the new Ford Puma. Profitability was hampered by significant margin erosion in used vehicle sales following a market correction in valuations,” it said.

BUSINESS REPORT