Value Group is projecting 20% or more difference in profit in its first quarter 2017 financial report against the profit recorded from the previous corresponding period due to some challenges faced by the company.
The company said trading conditions in the logistics environment are extremely challenging. Poor growth rates, in addition to the termination of non profitable business, have reduced the Group’s volume base. Certain competitors continue to discount rates to non sustainable levels.
Value Group said a major restructuring exercise within the Logistics, truck rental, warehouses and Freightpak breakbulk operations was undertaken with the objective of reducing operating and overhead costs. In addition, rates were carefully evaluated and adjusted where required. The positive effect of this restructuring was successfully rolled out across the Group with the specific objective of reducing the cost base. Although volumes and activity increased in the second half compared to the first half, the reduced cost base contributed to an improvement in the Group’s results. In addition, the acquisition of Key Distributors (Pty) Ltd, effective 1 March 2016, has performed positively.
Considering margins are low, the business has outperformed expectations and continues to expand into new markets. Shareholders are accordingly advised that basic and headline earnings per share for the year ended 28 February 2017 will be 55% to 75% higher than that achieved in the previous corresponding period.
This translates to basic earnings per share ranging from 54,9 to 62,0 cents per share in relation to the comparative period (35,4 cents per share) and headline earnings per share ranging from 57,7 to 65,1 cents per share in relation to the comparative period (37,2 cents per share).