Although JSE-listed industrial and automotive parts distributor Hudaco endured a difficult six months to May 31, CEO Graham Dunford is pleased that the company managed to achieve a turnover of R3.9-billion for the period, even though it was 2.4% lower than that of the comparable period in 2024.

“We've had very tough trading conditions. It's been a really tough six months for us. We had a really nice end to the 2024 financial year and we had hoped that that would continue into the first half of this financial year.

“December and January, however, were not as good as we had hoped. We thought that things would pick up, but there was definitely a slowdown from the end of last year,” he said during the presentation of company’s interim results on July 4.

Dunford said South Africa was currently on record as one of the most difficult places to do business.

“We're really feeling it. It's really tough to do business in South Africa. There's been a lot of low business confidence,” he said, referencing the Budget “fiasco” in particular, as well as infighting in the political space.

“The Government of National Unity, like children, are fighting instead of working together for the best interests of South Africa.

“We've had [US President Donald Trump] and these tariff wars creating uncertainty around the world. We've also had the war in Ukraine and all the nonsense going on in the Middle East. These are things that have just brought business confidence down,” Dunford bemoaned.

He highlighted the negative impact that the persistent domestic decline in mining and manufacturing was having on Hudaco.

“If we look at what's been happening over the last few years, and especially these last six months, the biggest drags on the economy have been mining and manufacturing.

“If we go back to the 1980s, mining was 21% of South Africa's GDP. We were one of the top mining countries in the world. But look at where we are now. It's now only 6% or 7% of our GDP,” Dunford said.

Hudaco concluded two acquisitions during the reporting period, namely Isotech and Flow Solve. These acquisitions, while not included in the like-for-like comparative figures, contributed positively to the group's overall results.

The group generated R442-million in cash from operations in the first half of the 2025 financial year. Dunford highlighted this as an important indicator of the business’s underlying health.

Although total turnover declined 2.4% to R3.89-billion, gross profit margin improved by 0.8 percentage points to 37.8%. Dunford described this increase as a strong result, achieved through disciplined management of factors within the company’s control. Operating profit rose by 1.5% to R419-million.

Comparable earnings a share increased by 6.1% to R8.33. Headline earnings a share rose by 19.6% to R9.38 and basic earnings a share were up 19.9% to R9.41.

As such, Hudaco declared an interim dividend of R3.50 a share, a 7.7% increase over the prior comparable period.

Hudaco maintained high inventory levels, with inventory at half-year reported at about R2.8-billion. Dunford said the group prioritises having the right products available at the right time and in the right places across its network.

“We like to think that we've got instant availability around the country, having all the right products in the right places at the right time. It doesn't always work out that way, but it's what we strive to achieve,” he said.

The group operates 31 warehouses across South Africa, with more than 130 branches, 800 international suppliers and more than 230 000 line items.

On the receivables side, Hudaco reported a book of about R1.3-billion for the period. Dunford emphasised the value of the group’s broad customer base.

“There were 30 000 active customers at any one time. This is a really healthy thing for us. What it means is we have got generally low value transactions, and because we selling bearings, sprockets and chains – small values – we're not a really big tender and contract business company where we have a big risk on big numbers,” he explained.

Hudaco FD Clifford Amoils noted that turnover figures were presented on a like-for-like basis to ensure a meaningful comparison with the prior year. This approach excluded the contributions from newly acquired entities, focusing solely on operations that have been part of the group since the start of the 2024 financial year.

On this basis, turnover actually declined by 3.4%, from R3.98-billion to R3.85-billion.

Gross profit for the period was R1.47-billion, virtually unchanged from the R1.474-billion reported in the comparable period in 2024, while like-for-like operating expenses declined by 1.5%, from R1.06-billion to R1.05-billion.

Including Isotech’s expenses, overall operating costs still reflected a 1% reduction in absolute rand terms. Operating profit on a like-for-like basis matched the prior year’s figure at R414-million. When contributions from acquisitions were included, operating profit increased by 1.5% to R419-million.

Hudaco’s profit before tax was R387-million, reflecting a 19.2% year-on-year increase, while profit after tax rose by 22.9% to R292-million.