Unaudited interim results
for the six months ended
31 December 2020

Divisional performance

Logistics
International

Logistics International encompasses road freight, air and ocean, contract logistics and LLP activities outside of Africa – most notably our contract logistics and freight businesses in Europe and the United Kingdom.

Operating context

The rising COVID-19 infection rates across Europe in recent months and the subsequent return to lockdown restrictions in a number of European countries and the UK impacted the financial performance of this division. Currently all businesses are operational and performance is improving as the recovery in China began to positively impact European export markets. Automotive production ramped up as car sales volumes recovered, albeit not to pre-COVID-19 levels. While the initial signs of recovery are positive, the passenger car market has been slowing in Europe since September 2020, with consumers trading down from luxury vehicle brands. The chemicals industry is performing in line with expectations. Palletways in the United Kingdom showed volume growth on the back of higher demand due to increased home deliveries and demand for smaller more frequent deliveries by the market. Slower imports into the UK have affected Palletways, with more clarity expected when the new Brexit regulations have been fully implemented. The restrictions on UK car exports to Europe will also impact the international business.

The low water levels in Paraguay negatively impacted the shipping business in South America, which is part of continuing operations, but classified as 'held for sale'.

Operating performance (continuing operations)

Logistics International results

HY1 
F2021 
HY1 
F2020 

change on 
HY1 
  HY2 
F2020 

change on 
HY2 
Revenue (Rm) 10 705  8 755  22    9 300  15 
EBITDA (Rm) 1 079  952  13    507  >100 
Operating profit (Rm) 356  347    (359) >100 
Operating margin (%) 3,3  4,0  (3,9)
Return on invested capital (%) 0,2  4,9 
Weighted average cost of capital (%) 5,7  5,7 
Net debt (Rm) 4 698  4 137  14   
IFRS 16 lease obligations included above (Rm) 3 213  2 524  27   
Net debt excluding IFRS16 lease obligations (Rm) 1 485  1 613  (8)  
Net working capital (Rm) (630) 458  <(100)  

HY1  HY2 
F2021  F2020 
change 
2020 
change 
Freight 
Revenue (Rm) 6 426  4 809  34  5 223  23 
EBITDA (Rm) 515  520  (1) 66  >100 
Operating profit (Rm) 234  269  (13) (340) >100 
Operating margin (%) 3,6  5,6  (6,5)
Contract Logistics 
Revenue (Rm) 4 279  3 946  4 077 
EBITDA (Rm) 564  432  31  441  28 
Operating profit (Rm) 122  78  56  (19) >100 
Operating margin (%) 2,9  2,0  (0,5)
Note: Continuing operations excluding businesses held for sale. 
HY1 
F2021 
HY1 
F2020 

change on 
HY1 
  HY2 
F2020 

change on 
HY2 
Revenue (€m) 554  548    502  10 
EBITDA (€m) 57  59  (3)   29  97 
Operating profit (€m) 18  22  (18)   (19) >100 
Operating margin (%) 3,2  4,0    (3,8)
Return on invested capital (%) 0,2  4,9 
Weighted average cost of capital (%) 5,7  5,7 
Net debt (€m) 261  264  (1)
IFRS 16 lease obligations included above (€m) 179  161  11 
Net debt excluding IFRS16 lease obligations (€m) 82  103  (20)
Net working capital (€m) (35) 29  <(100)
HY1  HY2   
F2021  F2020 
change 
2020 
change 
Freight 
Revenue (€m) 332  306  282  18 
EBITDA (€m) 27  32  (16) >100 
Operating profit (€m) 12  17  (29) (18) >100 
Operating margin (%) 3,6  5,6  (6,4)
Contract Logistics 
Revenue (€m) 222  242  (8) 220 
EBITDA (€m) 30  27  11  25  20 
Operating profit (€m) 20  (1) >100 
Operating margin (%) 2,7  2,1  (0,5)
Note: Continuing operations excluding businesses held for sale. 

The performance of Logistics International improved significantly in the first six months of F2021 compared to H2 F2020 as many of our industries of operations are staging a recovery. When compared to H1 F2020, revenue increased by 1% and operating profit declined by 18% in Euros. In Rand terms, revenue from Logistics International rose 22% and operating profit increased by 3% resulting from a significantly weaker Rand versus Euro exchange rate during the period. The average exchange rate in H1 F2021 was R19,19/Euro versus R16,29/Euro in the first half of F2020.

The improved performance compared to H2 F2020 was mainly due to a recovery in vehicle sales in the automotive industry and strong volume growth in our express palletised distribution business (Palletways). Volumes in our chemicals-related businesses were less impacted by COVID-19 and further supported by new contract gains.

Results were partially offset by reduced volumes in the industrial businesses and additional COVID-19 related costs due to an increase in sick leave by our permanent employees who had to be replaced with temporary labour. These additional costs contributed to the operating margin decreasing from 4% to 3,3% (in Rand). New business revenue of c.R2,0 billion (Euros 114 million) was secured on a rolling 12-month basis to the end of December 2020. The contract renewal rate on existing contracts remains strong at c.85%, with an encouraging pipeline of new opportunities despite the impact of the pandemic.

The South American shipping business continues to operate on a standalone basis and is reported as 'held for sale'. During the period, 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 capex from continuing operations (excluding IFRS 16) of R108 million was incurred during the year mainly for replacement of transport fleet.

ROIC declined to 0,2% and is lower than WACC due to losses in H2 2020 over a COVID-19-impacted rolling 12 months.