Invicta Holdings, the JSE-listed company expanding its industrial parts and components businesses offshore, said yesterday that headline earnings a share fell 14% to 231 cents in the six months to September 30 after a solid trading was impacted by currency volatility.
Trading results were consistent with the previous period, but the rand strengthened against major currencies, particularly the US dollar, which led to a R18 million foreign exchange loss, compared with a R33m gain in the prior comparable period.
“With our strategy focused on expanding offshore, our business has become more reliant on the major foreign currencies. We believe our strategy is sound and will prove to be beneficial in the long term,” Invicta CEO, Stephen Joffe, said in the results announcement.
Prevailing market conditions, notably market uncertainty due to elections in many jurisdictions where the group operates, tough trading conditions, as well as rand volatility, remain challenges, he said.
“We are confident that Invicta is well positioned with experienced teams, strong customer relationships, and a solid footprint both nationally and globally to continue to provide sustainable returns to shareholders,” he said.
Several acquisitions and disposals took place during the six months. Firstly, all 6.9 million outstanding preference shares were redeemed for R703m, unlocking additional value for shareholders.
National Bearing was acquired in the UK for R294m - the UK company supplies consumable parts to the earthmoving and agricultural machinery after-markets and forms part of the RPE: Earthmoving operating segment of the group.
During April 2024, the 100% shareholding in KMP Holdings, which formed part of the RPE: Earthmoving operating segment, was sold to Kian Ann Engineering (KAG), in which the group holds a 48.81% interest, for R293m.
In addition, the group disposed of its 51% shareholding in Abrasive Flow Solutions for R7m, on August 1, 2024. The Kosmosdal property was sold and was classified as an asset held for sale at March 31, 2024 for a consideration equivalent to the R9m carrying value.
Invicta’s revenue grew 2% to R4 billion from R3.93bn and operating profit before foreign exchange movements was 11% higher at R368.85m. Cash on hand stood at a healthy R734m. The board intended to pay out a dividend at year end.
Equity accounted earnings from investments in joint ventures decreased 27% to R79m, impacted by a once-off gain of R33m recognised in the comparative period relating to the disposal of a property-owning subsidiary in Shanghai.
Net financing costs increased by R9m to R63m, due to increased borrowings used to partly fund the redemption of the preference shares.
The strategy to build both a geographically diverse - with 50% of the group income outside South Africa - and sectorally diverse business by 2026, would be tempered by careful evaluation of growth and acquisition opportunities, the directors said.
Current initiatives included conversion to solar power at selected installations in South Africa, and efforts to reduce debt to levels preceding the preference share redemption.
BUSINESS REPORT