Invicta Holdings’ offshore expansion tackles market challenges despite $990,000 forex loss

Oluwatosin Racheal Alabi -

Key Points

  • Invicta Holdings reports steady trading but faces foreign exchange losses.
  • Revenue grows 2 percent, but profit is impacted by rand volatility.
  • Offshore expansion strategy remains intact despite tough market conditions.

Invicta Holdings, led by South African billionaire Christo Wiese, has reported steady trading results for the six months to Sept. 30, 2024. However, its profits were affected by a foreign exchange-related loss as the South African rand strengthened against major currencies. The Johannesburg Stock Exchange (JSE)-listed company, which continues to expand its industrial parts and components businesses offshore, saw headline earnings per share fall by 14 percent to 231 cents, compared to 269 cents during the same period in 2023.

Impact of forex movements on profits

While trading results remained in line with the previous period, the company faced a foreign exchange loss of R18 million ($990,000), a sharp contrast to the R33 million ($1.8 million) gain reported in the prior comparable period. CEO Stephen Joffe reiterated that the company’s offshore expansion strategy, though increasingly reliant on foreign currencies, remains sound. “We believe our strategy is solid and will prove beneficial in the long term,” he said. Joffe acknowledged that market uncertainty — exacerbated by elections in several countries where Invicta operates — and rand volatility presented challenges for the business.

“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,” Joffe added.

Strategic moves and growth despite challenges

Over the past six months, Invicta has made several strategic moves to enhance shareholder value. This includes the redemption of 6.9 million outstanding preference shares for R703 million ($39 million), unlocking additional value for shareholders. The company also made key acquisitions and disposals. Invicta acquired National Bearing in the UK for R294 million ($16 million), a supplier of consumable parts to the earthmoving and agricultural machinery aftermarket, expanding its footprint in the sector. In April 2024, Invicta sold its 100-percent stake in KMP Holdings for R293 million ($16.1 million), as well as a 51-percent stake in Abrasive Flow Solutions for R7 million ($385,000) in August. Additionally, the company sold its Kosmosdal property for R9 million ($495,000), classified as an asset held for sale.

Revenue growth and future outlook

Despite market challenges, Invicta reported a two-percent increase in revenue, rising to R4 billion ($220 million) from R3.93 billion ($216 million) in the previous period. Operating profit before foreign exchange movements increased by 11 percent to R368.85 million ($20 million), and cash on hand stood at a healthy R734 million ($40 million).

Looking ahead, the company forecasts an average annual revenue growth of 7.5 percent over the next three years, outpacing the 4.5-percent growth forecast for the Global Trade Distributors industry. Invicta aims to generate 50 percent of its income outside of South Africa by 2026 and is presently working on initiatives such as converting selected South African installations to solar power while reducing debt levels to pre-redemption amounts.