Imperial gets all clear for Motus unbundling. The logistics and automotive group says its first quarter has been tough but the businesses are well positioned to ride out the weak economy.

Imperial Holdings says its two main operating divisions are well positioned to deal with the uncertainties, volatility and current "ambiguous" environment as it prepares to unbundle and list its automotive business separately.

In a statement ahead of its annual general meeting yesterday, Imperial said its logistics business would likely report flat revenue and operating profit for the six months to end-December, while Motus was expected to grow revenue, operating profit and headline earnings, before taking into account any costs related to the proposed unbundling.

The group's shareholders voted unanimously in favour of the unbundling at the AGM.

The group said the technical recession had placed most sectors under pressure. Challenging trading conditions had been exacerbated by a prolonged volatile rand. Imperial Logistics, which generates just under a third of its revenue in South Africa, had been affected by reduced volumes and competitive pressures, particularly in the manufacturing and consumer businesses. However, it said its gain rate on new contracts and renewal rates on existing contracts remained high, with an encouraging pipeline of new opportunities.

We continue focusing on rationalising our operations thereby taking out inefficiencies, complexity and cost to counter the negative impact of the economy," Imperial said.

Motus had maintained market share at just under 20% in a highly competitive market, with national vehicle sales declining marginally in the three months to end-September. It said the trend of consumers trading down to entry-level models was continuing.

Imperial said its positioning as mainly a distributor of pharmaceuticals and consumer packed goods in Africa outside of South Africa had stood it in good stead. However, its German shipping operations had been negatively affected by significantly lower levels on the River Rhine for a prolonged period. Also, the implementation of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP) had resulted in much lower vehicle production volumes in Logistics International's automotive business. It said production volumes were expected to pick up towards the end of the calendar year.

It expected both Imperial Logistics and Motus to grow revenue, operating profit and headline earnings per share for the full year, subject to one-off costs related to the Motus unbundling. Imperial Logistics was likely to perform better in the second half of the year due to one-off factors that will affect first-half earnings.

Motus lists on the JSE on 22 November, while Imperial Holdings will change its name to Imperial Logistics.

Imperial's shares declined 6.8% to R158.96 yesterday.

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