CEO Hubert Brody told Business Day yesterday, 8 October 2009, the acquisitive approach for the transport and logistics group, which announced its biggest acquisition in years last month, remained cautious and conservative.

Brody said companies were not yet experiencing an upturn in trading conditions. In contrast, SA's leading indicator was suggesting the economic situation was improving.

To entice the group to revert to its aggressive acquisition ways, Imperial wanted to see sustained recovery in manufacturing activity and revival across a wide range of commodities, not just iron ore, steel and coal, he said.

Brody said the turnaround in manufacturing and commodities was the tipping point for which Imperial was waiting before going on the acquisition trail.

For now, he said, the company was sticking with applying diligence, saying that “if acquisition opportunities come, we will grab them” if they were not too risky.

There were compelling reasons for Imperial to consider acquiring a strategic stake in the Midas group, which complemented Imperial's parts business.

It announced the proposed acquisition on 29 September 2009.

Brody said although organic growth produced the highest quality growth for the group, it was not enough. “We seek acquisitions.” He said that the company had always been aggressive with acquisitions.

Now that Imperial's executives had largely finished their rationalisation and restructuring efforts, they intended to turn their attention to the group's growth strategy, which entailed expanding businesses in existing industries rather than venturing into new ones, Brody said.

He said he did not expect any major structural changes to the group's portfolio of businesses — logistics, motor retail, and tourism and car rental.

Just before the global financial crisis in September last year, Imperial sold Tourvest and offloaded its aviation division for R852m. It also unbundled the leasing and capital equipment group Eqstra.

“We like the industries in which we are in.” The only significant outstanding issue was the sale of Imperial Bank, he said.

Brody said fresh investment in the group would be biased towards the supply chain and logistics business, and to a certain extent the tourism unit.

He said the company sought to deliberately shun the motor retail business, which makes up more than 30% of the total operating profit, because it wanted this business to account for less than a quarter of the operating profit.

The group planned to increase the operating profit share of the logistics and tourism units to 60% - 70%, he said. Their combined share stands at about 56%.

The company, he said, had rationalised its motor retail business to such a degree that it was appropriately sized for the current market conditions. Bank lending rules were still tight and this underscored that there was no improvement in approval rate and onerous deposit requirements, which were as high as 25%.

Source: Business Day

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