Imperial growth inflated by earlier loss
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Industrial Correspondent
THE expected rise in earnings in transport group Imperial`s figures for the six months to December 25 is more an accounting function than a performance related increase, an analyst said yesterday.
Imperial said in a trading update yesterday that earnings a share would be between 30% and 35% higher, and headline earnings a share would increase between 25% and 30%.
The analyst, who did not want to be named, said this period was being compared with the six months period ending in December 2003 when earnings had been depressed by a R6m exceptional cost, and a R26m impediment cost.
The analyst said, though, that the group`s earnings had probably been boosted to an extent by the rise in new car sales during the period .
The R26m impediment related to Imperial revaluing the contribution coming from its aircraft.
It said at the time that the strength of the rand had a `severe effect` on the operating profit of its aviation leasing division because it was converting its foreign revenue and the sale of its aircraft from dollars.
The company said the stronger rand was one of the reasons that operating profit for its aviation leasing division had fallen to R109m for the six months to December 2003 from R183m in the previous comparable period.
Operating profit margin shrank to 9,2% from 18,6% and the division`s operating assets fell R115m or 3% to R3,8bn with no capital expenditure incurred.
Imperial CEO Bill Lynch declined to comment on the trading update because the group was in a closed period.
The transport group said earnings and headline earnings growth a share for the financial year to June 25 should not be assumed to be in the same range as that of earnings and headline earnings a share for the six months to December 25.
An I-Net Bridge consensus forecast by nine analysts expected earnings a share to rise to 1003c for the full year from the 718,7c it made last year.
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