South Africa’s Imperial Logistics said on Thursday that it expects its full-year operating profit to be lower than last year due to rising costs and slow economic growth in its home market.
Its shares plunged more than 10% in early trade as investors focused on the weak outlook, which overshadowed a 24% rise in earnings in its first half year.
Imperial, which spun-off and listed its automotive arm Motus in November, is battling reduced volumes and lower consumer demand mainly in the consumer packaged goods and healthcare businesses in South Africa.
“Logistics South Africa to deliver (second half) performance below that of the prior period due to lower consumer demand impacting the (consumer goods) business, the low-growth economic environment in South Africa and costs associated with the business rationalisation and restructure,” the company said in its half-year results statement.
The transport company, which also has operations in Europe, reported continuing headline earnings per share (Heps) of 300 cents for the six months ended December 31, up from 241 cents a year earlier, due to lower debt levels resulting in lower interest costs.
Heps is the most widely watched profit gauge in South Africa which strips out certain one-off items.
In the UK, Brexit has increased economic uncertainty, with the potential risk of depressing consumer demand, the company said.
Operating profit from continuing operations were flat in the first half at R1.3 billion ($93 million).
Imperial said Heps for the year ending June 30 is forecast to be in line with the prior year.
Shares in Imperial were down 10.3% at R64.24 by 0756 GMT.