The demand for healthcare products continues to rise and a five-year compound annual growth rate (CAGR) of 18% has been forecast for the healthcare industry in Africa. Imperial is also becoming more involved in the generics, animal health and medical device markets which are expected to grow significantly by 2023. For the 12 months, the healthcare sector generated 21% of total revenue and delivered growth of close to 10%. Contract renewals stand at c.90% and a strong new business pipeline across the group is in place.
In addition to both the challenges and the opportunities presented by Covid-19 (mentioned in the Covid-19 section previously), there are a number of other key drivers that are fundamentally impacting
With healthcare being a key industry of operation and growth, Imperial is well positioned to leverage these opportunities.
Covid-19 has notably changed purchasing trends and consumer behaviour. With customer needs for increased convenience growing at exponential rates, greater pressure has been placed on logistics companies to keep pace. Ecommerce is an area where many logistics companies are experiencing good growth with global ecommerce volumes growing 89% in May 2020 compared to May 2019. Many consumers are expected to continue shopping online once life normalises.
The consumer sector in our key markets were already under pressure prior to Covid-19 due to increasingly challenging macroeconomic conditions which resulted in an overall decline in consumer spending. Despite difficult trading conditions, lower consumer demand and strict lockdown restrictions imposed on the liquor and tobacco sectors in South Africa, our consumer sector still achieved double digit growth of c.16% and generated c.32% of group revenue. The new business gain rate is a notable 35% and a good new business pipeline mainly in the Logistics operations is in place.
Through its extensive footprint across Africa, Imperial will play a critical role in meeting consumers’ ever-increasing need for logistics and market access services in previously inaccessible markets.
Despite the significant challenges posed by the pandemic and the global lockdown, our automotive activities delivered single-digit revenue growth during the 12 month period. As described earlier, the automotive contract logistics and related transport businesses in Europe, where most of our automotive logistics services are provided, were most impacted by Covid-19 as all OEMs implemented plant shutdowns (c.90% of our automotive revenue is generated in Europe). The overall decrease in volumes was, however, mitigated by new business gains.
The Covid-19 pandemic has exposed and demonstrated how vulnerable automotive supply chains are to disruption, forcing companies to investigate ways of making these integrated supply chains more resilient. Many of the leading global automakers were impacted in the early stages of the pandemic as 30% to 60% of their parts are sourced from China. Many OEMs only expect car sales to reach pre-Covid-19 levels by the end of 2022 or 2023.
Electric modes of transport will impact automotive supply chains in future as fewer component parts will be required and technology and batteries have specialised complex requirements. Imperial has the necessary infrastructure and expertise for the transportation and storage of batteries which are classified as hazchem products, requiring specialised conditions and adherence to strict safety and health regulations across the regions. Imperial was able to assist one of the largest global OEMs with last minute transport and storage solutions in this area during Covid-19.
This industry contributed c.14% to group revenue. Despite a negative growth rate, a strong pipeline of new business is in place – with a contract renewal rate in excess of 85%. While China is expected to become the world leader in production and consumption of chemicals, many commodity chemical companies have to cope with feedstock price volatility, supply chain and logistics challenges and unpredictable customer demand. The industry is accordingly investigating alternatives to the sector’s reliance on inputs from China-based suppliers.
Covid-19 has disrupted supply chains differently across manufacturing plants and distribution networks all over the world. The global chemical production declined by 3,3% in March 2020 and a further 1,3% in April 2020 due to the effects of the pandemic. Several European countries had among the largest production decreases during April and May 2020.
The chemical industry is focusing more on green logistics and stricter compliance, which creates opportunities for Imperial.
However, our significant exposure to the agrochemicals market provided resilience to our performance and negated some of the negative impacts listed above.
This sector contributes 18% of total revenue. Imperial has a well-diversified spread across the industrial sector – where sub-sectors were impacted differently across the regions by the Covid-19 pandemic, thereby diluting our overall exposure in this sector. With a strong sales pipeline in place, many of Imperial’s sub-sectors were performing consistently prior to Covid-19 but were severely impacted due to being classified under “non-essential” services during the lockdown restrictions in many countries. Certain sectors within the industrial sector – such as the packaging sector – displayed resilience as manufacturers experienced an increased demand for packaging materials for the food and hygiene sectors.