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Automotive and Industrial pillar |
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This pillar is focused on the full spectrum of automotive and industrial trading activities of the group, with the exception of Financial Services. It houses Imperial’s Vehicle and Industrial Distribution, Retail and Allied Services; Automotive Retail; Car Rental and Autoparts activities. The divisions included in this pillar are as follows:
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2013 Rm |
2012 Rm |
% growth |
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Revenue | 57 577 | 51 679 | 11 | ||||
Profit from operations | 3 578 | 3 409 | 5 | ||||
Operating margin (%) | 6,2 | 6,6 | |||||
Net operating assets | 15 144 | 13 117 | 15 | ||||
Revenue to average net operating assets (times) | 4,1 | 4,4 | |||||
Revenue relating to sales of goods to average inventory (times) | 5,1 | 5,5 | |||||
Weighted average invested capital | 14 849 | 12 765 | 16 | ||||
Return on invested capital (%) | 14,5 | 14,5 | |||||
Return on invested capital (PPA/acquired cost adjusted) (%) | 14,5 | 14,5 | |||||
Weighted average cost of capital (%) | 8,7 | 9,6 | |||||
Net capital expenditure | 1 857 | 1 212 | 53 | ||||
Number of new and used vehicles and motorcycles sold | 206 462 | 198 131 | |||||
Number of new vehicles sold in South Africa | 123 737 | 120 218 | |||||
Number of new vehicles sold in Australia and the United Kingdom | 10 854 | 10 846 | |||||
Number of used vehicles sold in South Africa | 63 266 | 58 608 | |||||
Number of used vehicles sold in Australia and the United Kingdom | 4 346 | 4 540 | |||||
Number of motorcycles sold | 4 259 | 3 919 | |||||
Number of vehicles for hire | 17 602 | 16 599 | |||||
Number of employees | 19 336 | 18 305 | 6 | ||||
Number of new vehicle dealerships | 243 | 228 |
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Key stats
Key macro drivers
Overview The divisions included in this pillar are as follows:
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We disposed of NAC during the year, thereby exiting aviation distribution. Subsequent to the year-end, the division also disposed of its tourism operations, subject to Competition Commission approval. This is in line with our strategy of exiting sub-scale businesses and focusing on our core industries; namely, logistics, automotive and industrial distribution and financial services.
Distribution, Retail and Allied Services | ||
Vehicle Distribution and Allied Services |
This unit comprises a number of individual businesses that import and distribute a range of passenger and light commercial vehicles and motorcycles on behalf of our principals. | |
Industrial Distribution | This unit is aligned to Imperial’s strategy of growing its business in industries that complement its existing distribution expertise. It distributes forklift trucks, industrial cleaning equipment, access equipment, golf carts, compact equipment and other products with an industrial application. | |
Automotive Retail |
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Automotive Retail | The Automotive Retail division comprises commercial, passenger and light commercial dealerships in South
Africa, commercial and van dealerships in the United Kingdom, and outdoor and leisure products which
include Beekman Canopies, Jurgens Caravans and Safari Centre.
Franchise dealerships represent virtually every major OEM brand. |
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Other | ||
Car Rental | The Car Rental Division comprises three business units: Car Rental, Used Car Sales (under the Auto Pedigree
brand) and Panel repair centres. The car rental brands are Europcar, Europcar Van Rental and Tempest. |
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Autoparts | Autoparts acts as an importer, wholesaler and distributor of parts and accessories for motor vehicles that are outside manufacturer warranty and service plans. The division includes Midas, Alert Engine Parts, Turbo Exchange and the newly acquired Afintapart. |
The new vehicle market was favourable during the year with the market in South Africa, growing by 7,6% for the year. Good credit availability, affordability and continued low interest rates underpinned the growth in the market. The used car market also improved during the year as a result of new vehicle price increases. The commercial vehicle market in the UK remained depressed.
Trading conditions in the industrial distribution market were strong, driven by an increase in the need for warehousing and distribution solutions.
Competitive trading conditions persisted in the car rental market which has seen rental rates under pressure in recent years. The impact of higher accident rates and unusual hail storms during the year had an adverse impact on operating margins. The market for used vehicles improved during the year.
The autoparts industry is mature but stable as it is represented by a large car parc of approximately 10 million vehicles with an average age of approximately 12 years. During the year, reduced consumer demand was experienced on discretionary products like camping equipment and accessories.
Our people
The development of key technical skills and a robust pipeline of management skills are two critical people-related focus areas across the Automotive and Industrial pillar. The Imperial Technical Training Academy offers a range of SETA-accredited programmes for apprentices and other technical skills, at the three diesel and petrol apprentice training facilities. We have in excess of 771 registered apprentices in this business.
The empowerment of women is a key priority in the car rental businesses and women hold more than 45% of the management positions across Europcar and Tempest. A learning academy was also opened in August and to date 3,5 training days per individual staff member has been achieved with an annual target of 5,5 days.
Our impact on the environment
Across the various business units, waterless car wash bays were installed. The eco-friendly wash bays reduce the amount of water used to wash a single car from around 2,7 litres to less than 1 litre. Several dealerships have also installed rain harvesting systems and new facilities are built according to sustainable building practices. Among these is the Weltevreden Park Kia dealership, which is the first solar-powered Kia dealership in the world. The car rental business has installed water recycling systems at its wash bays.
By changing the fleet mix Europcar has reduced its carbon emissions by an average of 3% across all vehicle groups.
Our commitment to customers
OEMs measure the customer satisfaction rating of our dealerships in line with international standards. High performance on these indices is an absolute imperative to these business.
Customer experience remains a key focus area in the car rental business and is one of the few differentiators in this highly competitive industry. To ensure that the highest standards are met, Europcar has adopted and implemented the Net Promoter Score, a globally tried and tested world-class tool, to benchmark their service levels against international operators.
– | Target best in industry ROIC and operating |
– | Increase market share |
– | Grow annuity-type income from parts, service and after-sales activity |
– | Grow private vehicle leasing business |
– | Add more industrial brands to current distribution network |
– | Identify acquisition opportunities in new areas of distribution and services related to existing activities and new areas |
– | Expansion of parts and vehicle distribution into Africa |
We anticipate tougher trading conditions in the new motor vehicle market during the year ahead. Reduced disposable income, a weaker currency and the high base created by strong volume gains in the last four years all present headwinds for growth. While our inventory position has improved, we expect the market to be more competitive as market conditions get tougher. As a result of new vehicle price increases, the used car market should improve further and after-sales parts and service revenues will continue benefiting from the increase in the installed base of vehicles in the brands we import.
Conditions in the Car Rental business are expected to remain competitive. The used vehicle market is expected to improve.
The autoparts business should continue to perform solidly as initiatives to expand its product range and geographic footprint bear fruit despite the increasingly competitive market.
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