Operating context

South Africa
(55% revenue; 63% operating profit)

  • Despite improved sentiment the economy contracted sharply in H2 F2018.
  • Consumer affordability remains under pressure despite some monetary easing.
  • Depressed volumes and competitive pressures in logistics.
  • Highly competitive vehicle market.
    • NAAMSA national vehicle unit sales increased by 2%.

Rest of Africa
(9% revenue; 13% operating profit)

  • Recovery in commodity prices, gradually improving domestic demand and some policy reforms improved economic prospects in most countries in sub-Saharan Africa.
  • Imperial's performance in the Rest of Africa (predominantly logistics) was negatively impacted by:
    • political instability in Kenya;
    • recessionary conditions in Namibia;
    • increased competition and subdued demand from key aid and relief markets; and
    • the R/US$ exchange rate strengthening by 5% on average during the year.

Eurozone, UK and Australia
(36% revenue; 24% operating profit)

  • Economic conditions in Europe were positive:
    • the continuing economic expansion in Europe has resulted in unemployment improving; and
    • certain sectors in which we operate remain under pressure, eg steel.
  • Our German shipping operations were negatively impacted by low water levels on the River Rhine in H1 F2018; hot weather conditions since July 2018 has again resulted in low water levels.
  • Palletways' performance was hindered by toughening economic conditions in the UK.
  • Economic growth and the passenger vehicle market in the UK are being depressed by the uncertainties arising from Brexit and consumers switching from diesel vehicles to petrol vehicles.
  • The Australian vehicle market recorded growth despite being fragmented and highly competitive, but margins on new vehicles remain under pressure.
  • New European Union (EU) emissions regulation stipulating lower emission thresholds and process for approval, will lead to OEMs reducing vehicle production volumes in H1 F2019, and negatively impact sales of vehicles manufactured in Europe.