Invicta Holdings reports strong global earnings growth driven by operational improvements
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Invicta Holdings, which is listed on the JSE, has marked a year of impressive financial achievements, reporting a sustainable operating profit growth of 16% to R752 million for the year ending March 31.
This positive performance reflects the strategic focus on streamlining operations and capitalising on market opportunities, according to CEO Steven Joffe.
In a statement released after the results announcement, Joffe expressed satisfaction with the company's progress, noting a 13% rise in sustainable headline earnings per share, which now stands at 553 cents.
'These numbers reflect the robust and consistent nature of the group's core operations,' he said. The South Africa-based company is renowned for its industrial consumables, capital equipment, and auto-agri replacement parts on a global scale.
Key initiatives have included the redemption of all preference shares and the disposal of the Kian Ann warehouse in Singapore, both vital steps in enhancing operational efficiency. 'We are pleased with this strong set of results,' Joffe added, underlining the importance of these changes amid challenges presented by currency fluctuations and significant delays in shipping and logistics.
The CEO also highlighted the role of the South African Reserve Bank's decision to cut interest rates three times during the financial year as a necessary measure to stimulate economic activity. 'We hope the cuts will continue, as interest rates remain high,' Joffe stated.
Another critical factor in this period of growth was Eskom's power supply stability, which has enabled Invicta's customers to conduct business without interruptions for over 300 consecutive days—a significant achievement given the company's historical struggles with load shedding.
The strategic disposal of the Singapore property netted the group a dividend of SGD$20m from Kian Ann, coupled with the recent redemption of outstanding preference shares amounting to R703m on July 8, 2024. 'Through this rationalisation of our capital structure, we have unlocked additional value for ordinary shareholders,' said Joffe, emphasising the future benefits shareholders can anticipate.
To further bolster its value, Invicta repurchased and cancelled 4.9 million ordinary shares for R157m, with full effects expected in the coming year. A significant step in April was the full acquisition of Nationwide Bearing Company (NWB) in the UK, alongside the strategic disposal of KMP Holdings to Kian Ann Engineering, Invicta's joint venture.
Moreover, the establishment of a start-up business named KSP in the US is part of ongoing efforts to solidify Invicta's presence in key markets. This new venture, operating out of Alexandria, Louisiana, aims to enhance the product line of Invicta's KTSUA undercarriage business.
However, not all segments experienced growth; revenue from the Replacement Parts for Earthmoving Equipment (RPE) decreased markedly by 48% to R567m. Despite these fluctuations, NWB showed a commendable performance in its inaugural year, while Kian Ann Group saw a revenue increase of 16% and sustainable operating profit up by 12% to SGD$29m.
Addressing the outlook, Joffe underscored the importance of agility in the face of global uncertainty, stating, 'We will continue working hard to generate cash. Having a relatively debt-free business gives us the necessary time to respond to difficult situations.'
Moreover, the group intends to return about a third of its earnings annually to shareholders through share buybacks or dividends.
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