Logistics International encompasses road freight, contract logistics, and air/ocean activities outside Africa - most notably our contract logistics and freight businesses in Europe and the UK.
Despite the significant overhang of COVID-19, economic activity, growth forecasts and employment rates in Europe and the UK are steadily improving due to additional fiscal support in certain countries and swift progress in the roll-out of COVID-19 vaccines. Most of the European countries have eased their lockdown measures due to decreasing numbers of infected people. In Germany, certain lockdown restrictions remain in place but gradually eased towards the latter part of F2021. However, the automotive sector continues to be negatively impacted by the global shortage of semi-conductors.
The heightened impact of Brexit has resulted in slower imports into and exports from the UK and a shortage of drivers in the UK, negatively impacting our road freight businesses.
The low water levels in Paraguay negatively impacted the shipping business in South America, the sale of which was concluded in April 2021.
Pro forma Logistics International segment results
Half year 1 | Half year 2* | Full year | |||||||||
LOGISTICS INTERNATIONAL | 2021 | 2020 | %change | 2021 | 2020 | %change | F2021 | F2020 | %change | ||
Revenue (Rm)^ | 10 714 | 8 755 | 22 | 10 444 | 9 359 | 12 | 21 158 | 18 114 | 17 | ||
---|---|---|---|---|---|---|---|---|---|---|---|
EBITDA (Rm)^ | 1 079 | 951 | 13 | 911 | 505 | 80 | 1 990 | 1 456 | 37 | ||
Operating profit (Rm)^ | 356 | 347 | 3 | 186 | (360) | >100 | 542 | (13) | >100 | ||
Operating margin (%)^ | 3,3 | 4,0 | 1,8 | (3,8) | 2,6 | (0,1) | |||||
Return on invested capital (%)^ | 0,2 | 4,9 | 5,7 | 0,1 | |||||||
Weighted average cost of capital (%)^ | 6,1 | 5,7 | 6,5 | 5,5 | |||||||
Net debt including lease obligations (Rm) | 4 698 | 6 784 | (31) | 3 619 | 8 211 | (56) | |||||
Lease obligations included above (Rm) | 3 213 | 3 080 | 4 | 3 195 | 3 751 | (15) | |||||
Net debt (Rm) | 1 485 | 3 704 | (60) | 424 | 4 460 | (90) | |||||
Net working capital (Rm) | (630) | 711 | (189) | (483) | (395) | 22 |
^ | Excluding businesses held for sale. |
* | Half year 2 numbers are unaudited and derived from deducting the half year 1 results from the full year published results of 30 June 2021. |
Note: Continuing operations.
Half year 1 | Half year 2* | Full year | |||||||||
LOGISTICS INTERNATIONAL | 2021 | 2020 | % change |
2021 | 2020 | % change |
F2021 | F2020 | % change |
||
Revenue (€m)^ | 558 | 537 | 4 | 598 | 518 | 15 | 1 156 | 1 055 | 10 | ||
---|---|---|---|---|---|---|---|---|---|---|---|
EBITDA (€m)^ | 57 | 59 | (3) | 52 | 29 | 79 | 109 | 88 | 24 | ||
Operating profit (€m)^ | 18 | 22 | (18) | 12 | (19) | >100 | 30 | 3 | 900 | ||
Operating margin (%)^ | 3,2 | 4,1 | 2,0 | (3,7) | 2,6 | 0,3 | |||||
Return on invested capital (%)^ | 0,4 | 3,9 | 4,6 | 1,0 | |||||||
Weighted average cost of capital (%)^ | 5,7 | 5,9 | 5,9 | 5,5 | |||||||
Net debt including lease obligations (€m) | 261 | 432 | (40) | 214 | 421 | (49) | |||||
Lease obligations included above (€m) | 179 | 196 | (9) | 189 | 192 | (2) | |||||
Net debt (€m) | 82 | 236 | (65) | 25 | 229 | (89) | |||||
Net working capital (€m) | (35) | 45 | (178) | (29) | (20) | 45 |
^ | Excluding businesses held for sale. |
* | Half year 2 numbers are unaudited and derived from deducting the half year 1 results from the full year published results of 30 June 2021. |
Note: Continuing operations.
Half year 1 | Half year 2* | Full year | |||||||||
LOGISTICS INTERNATIONAL | 2021 | 2020 | % change |
2021 | 2020 | % change |
F2021 | F2020 | % change |
||
Freight | |||||||||||
Revenue (Rm)^ | 6 643 | 5 080 | 31 | 6 183 | 5 599 | 10 | 12 826 | 10 679 | 20 | ||
EBITDA (Rm)^ | 525 | 583 | (10) | 473 | 143 | 231 | 998 | 726 | 37 | ||
Operating profit (Rm)^ | 208 | 303 | (31) | 166 | (296) | >100 | 374 | 7 | >100 | ||
Operating margin (%)^ | 3,1 | 6,0 | 2,7 | (5,3) | 2,9 | 0,1 | |||||
Contract Logistics | |||||||||||
Revenue (Rm)^ | 4 071 | 3 675 | 11 | 4 261 | 3 760 | 13 | 8 332 | 7 435 | 12 | ||
EBITDA (Rm)^ | 554 | 368 | 51 | 438 | 362 | 21 | 992 | 730 | 36 | ||
Operating profit (Rm)^ | 148 | 44 | 236 | 20 | (64) | >100 | 168 | (20) | >100 | ||
Operating margin (%)^ | 3,6 | 1,2 | 0,5 | (1,7) | 2,0 | (0,3) |
^ | Excluding businesses held for sale. |
* | Half year 2 numbers are unaudited and derived from deducting the half year 1 results from the full year published results of 30 June 2021. |
Note: Continuing operations.
While our Logistics International business was the most impacted by the COVID-19 pandemic in F2020, this business recorded significant improvement in trading activity on the back of the easing COVID-19 restrictions and economic recovery over the past 12 months. All businesses are currently operational and are demonstrating significantly improved performance. As a result, Logistics International achieved strong revenue and operating profit growth in Euros of 10% and in excess of 100% respectively, and, in Rand terms, revenue from Logistics International rose 17% while operating profit increased by over 100% compared to the previous year.
Results were supported by new contract gains, effective cost management and volume recovery in key industries of operation as production ramped up. Logistics International's contract renewal rate on existing contracts remains strong at c.87%, with an encouraging pipeline of new opportunities. New business revenue of c.R2,2 billion was secured on a rolling 12-month basis to the end of June 2021.
Revenue generated from the freight business increased by 20% in Rands, supported by a good performance from our express palletised distribution business (Palletways) due to higher volumes in a COVID-19 environment, and a higher contribution from the air and ocean freight business. Operating profit increased by over 100% due to the growth in revenue supported by the improvement in operating margins.
Contract logistics increased revenue and operating profit in Rands by 12% and over 100% respectively as automotive production started to ramp-up again post COVID-19 lockdowns on the back of a recovery in vehicle sales. This, despite the automotive sector being negatively impacted by the global shortage of semi-conductors. Volumes in our chemicals-related businesses were less impacted by COVID-19 and further supported by new business gains.
The South American shipping business was disposed of in April 2021. During the year, it was significantly impacted by record low water levels, which impacted both volumes and margins. More details are included in the 'Disposals' section of this report.
Net capital expenditure from continuing operations excluding businesses held for sale (excluding IFRS 16) of R193 million was incurred during the year mainly for replacement capex for transport fleet. ROIC improved to 5,7% but is lower than WACC.