Diversification strategy helps Super Group in turbulent trading environment

JSE-listed logistics and mobility solutions company Super Group’s deliberate diversification strategy has helped to bolster its performance in what is a turbulent trading environment.

The group posted a 20.8% increase in earnings before interest, taxes, depreciation and amortisation (Ebitda) to R8.4-billion for the financial year ended June 30, compared with the prior year, as well as a 20.7% increase in operating profit to R3.9-billion.

This financial performance significantly exceeds that of pre-Covid-19 levels, with Ebitda having increased by 126% in the reporting year, compared with 2019.

Earnings a share increased by 24.9% year-on-year to 472c.

Super Group declared a dividend of 80c for the reporting year, compared with a dividend of 63c paid in the 2022 financial year.

CEO Peter Mountford boasts that Super Group continues to demonstrate the adaptability and resilience that is required to counter market challenges and leverage opportunities for growth.

“Against a backdrop of global socioeconomic volatility, the group proactively adapted its business models, client solutions and operational processes to stay relevant and competitive. This agility allowed Super Group to successfully reposition itself in response to shifting consumer demands and market dynamics,” he adds.

The company recorded new client wins, contract renewals and market share gains in the year under review, while investments in technology and assets has unlocked efficiencies, reduced costs and created capacity for further growth.

The group’s operations encompass multiple industries, markets and channels and it remains well positioned to manage fluctuating demand and supply chain disruptions.

With operations spanning Southern Africa, Australasia, Europe and the UK, group revenue and operating profit contributions from its non-South African businesses were 54% and 56%, respectively.

Mountford says the company continues investigating value-accretive acquisitions as part of its growth strategy, as it did with the acquisition of Amco in July.

Amco operates across the UK and other European countries, providing specialist land, air and sea logistics.

Notably, the Supply Chain Africa business delivered an excellent performance in the year under review, with operating profit having increased by 48.7% year-on-year to R1.26-billion, and the operating margin having increased from 6.6% to 7.1%.

Super Group reports that technology-based solutions in the consumer businesses delivered greater efficiencies and cost savings to clients, contributing to significant new business wins and contract renewals.

A diversified product basket and improving volumes in industries such as hospitality, entertainment and quick service restaurants also contributed to this strong performance.

Strong volume increases were experienced in the South African and African Logistics consumer and commodity transport businesses.

The industrial businesses also performed well, with good sales and profit performances from SG Mobility, SG Freight and Super Rent, the company states.

The Supply Chain Europe business reported an improved performance with 84% year-on-year growth in operating profit to R120-million, which reflects the ongoing evolution of the business model to ensure relevant services and optimised cost structures.

In the Fleet Solution division, the SG Fleet business benefited from strong order growth in the reporting year, better supply levels and a more supportive labour environment. SG Fleet’s operating profit grew by 23% year-on-year to R1.6-billion.

The Fleet Africa business also recorded good growth in ad hoc rental volumes on existing contracts, with an 8.2% year-on-year increase in operating profit to R243-million.

The Dealerships South Africa and UK businesses both recorded strong operating profit at 20.7% and 28.1%, respectively. Both businesses saw new vehicle sales volumes increasing.

Super Group says macroeconomic challenges will persist in the next financial year, but the difficult operating environment nonetheless presents significant opportunities to innovate and grow.