Preliminary summarised results
for the year ended 30 June 2020

Operating context

Imperial’s activities for continuing operations on the African continent produced 60% and 95% of revenue and operating profit respectively during the 12 months to June 2020, with the remainder generated mainly in the Eurozone and United Kingdom (UK).

Across regions, our businesses were exposed to amplified difficult economic and market conditions – particularly in South Africa and Europe (including the UK). This tough macro environment was exacerbated by the negative impact of Covid-19 on volumes across most sectors.

  1. Market Access – through operations mainly in East, West and Southern Africa, provides market access services in more than 20 countries on the African continent

    The operating environment in most of our markets in Africa continued to see volatility. The Covid-19 pandemic is having a significant impact on Africa and its people – with consumer and household spend impacted negatively as a result of job losses, job scarcity and diminished disposable income spend. Oil-dependent markets are being impacted by reduced global demand and reduced oil prices, although the latter has increased to some extent since May.

    Covid-19 will present substantial challenges in the short term, with negative gross domestic product (GDP) growth expected across most economies. Disruptions on both the supply and demand sides of the economy will persist until containment of the pandemic is achieved. This economic reality will weigh heavily on consumer sentiment and curb spending considerably, especially on non-essential goods.

    Currency weakness is likely to lead to high imported inflation despite muted domestic demand. Our sub-Saharan African markets are particularly vulnerable due to their dependence on international tourism, commodities and Chinese trade and investment – as well as their exposure to shifts in risk sentiment.

    Most countries in which we operate have relaxed their Covid-19 restrictions and some level of recovery has been evident since May 2020, although activity is not yet back to normalised levels. All businesses in Market Access are currently in operation although volumes remain impacted. We expect a steady recovery in revenue as lockdown restrictions ease.

    Despite the impact of Covid-19 and the ongoing subdued growth and lower-consumer spending in certain countries of operation, our primary positioning as a leading market access partner in the healthcare and consumer industry continues to stand us in good stead in Africa. We remain optimistic about the opportunities inherent in Africa’s rising consumerism, urbanisation, population growth and the strengthening of healthcare systems. These trends present growth opportunities and continue to drive the demand for skilled market access and logistics capabilities. Our credibility, experience, innovative business models and commercial solutions likewise position Imperial as a uniquely skilled partner to multinational manufacturers and brand owners.

  2. Logistics Africa business, mainly in South Africa

    Prevailing weak economic conditions, high unemployment and low consumer spending were exacerbated by Covid-19 and volumes declined across most sectors. Tobacco, alcohol and fuel volumes, in particular, saw significant declines as a result of lockdown restrictions.

    We added capacity to meet increased demand from fast-moving consumer goods (FMCG) and healthcare clients as the pandemic drove heightened demand and consumption of related products. Nearly 90% of this business is currently in operation (based on revenue). We anticipate normal trading to return in the short to medium term given the lockdown restrictions on alcohol and tobacco were recently lifted.

  3. Logistics International business mainly in Eurozone and UK

    With industry exposure still largely focused on mature German manufacturing industries – such as automotive, chemicals and steel – our European operation was most impacted by the Covid-19 pandemic. Significant reduction in volumes and activities was experienced in March, April and May, as many of our industries experienced complete lockdown.

    Automotive contract logistics and the related transport businesses were most impacted – c.45% of continuing revenue is generated from automotive – as manufacturing of motor vehicles and all related activities ceased completely. Some original equipment manufacturers (OEMs) in Germany are returning to production but levels are still not near those of pre-pandemic times. Volumes in chemicals and related shipping businesses were less impacted – c.27% of continuing revenue is generated from the chemical industry. Other businesses remained operational but recorded a significant decline in volumes.

    Many countries in Europe and including the UK, have now eased lockdown restrictions and there has been a noticeable increase in activity and volumes since May. All businesses in Logistics International are currently in operation although volumes remain impacted. In an effort to boost economic recovery, create employment and protect jobs, the European Union (EU) is proposing a comprehensive European recovery plan to fully exploit the potential of the EU budget. Alongside the EU initiatives, each member country is providing emergency economic recovery packages. In Germany – our largest market – the government is acting definitively and systematically to protect the German economy and the emergency package in place is the largest in the history of the country.