AltX logistics group OneLogix, driven by exceptional performances from its subsidiaries across the board, almost doubled revenue for the six months to November 2007 year-on-year. All of the group’s businesses exceeded budget, led by stellar performer Vehicle Delivery Services (“VDS”).
OneLogix boosted revenue by 95% to R249 million from R127 million in the same period in 2006 and operating profit, equating to 13,5% of revenue, doubled to R33,2 million. Headline earnings per share rose 41% to 7,2 cents per share, supported by cash from operations which increased by 90%.
CEO Ian Lourens attributes the group’s performance to robust organic growth underpinned by strong demand in its target markets and sound business strategies in place across the group.
Top performer - auto logistics company VDS - maintained a strong presence in both the cross-border and local passenger vehicle markets. Lourens points out that VDS increased market share in the local passenger vehicle market despite the tightening of the market over the past six months. “VDS is now one of only three major players in this market,” he says. Buoyed by increasing demand for resources in the DRC and Zambia which is indirectly driving demand for vehicles, the cross-border market - in which VDS has more than 90% market share - is growing and Lourens describes it as “vibrant and sustainable.”
To mitigate an anticipated drop-off in passenger vehicle transfers due to a general contraction in the South African economy, VDS identified the local commercial vehicle market as a growth opportunity and in September 2007 successfully entered the market. Lourens explains: “This market is directly related to infrastructure spend, which is spiralling, with demand for trucks accordingly at the highest level for decades.” The niche market entails the delivery of separate vehicles by individual drivers, enabling OneLogix to benefit from healthier profit margins than those in the bulk delivery of passenger vehicles.
Franchise chain PostNet posted a record performance on the back of recent rebranding and a revaluation of business strategy. Lourens is confident that growth will continue. “PostNet has a strong brand presence in the high-growth local SMME market, which we are continually enhancing with a range of new products and services.” The chain of 221 outlets services over 40 000 customers daily.
Further, the group’s horizontal integration of PostNet and Media Express (“ME”) services has proved successful. Lourens says that while ME’s focus remains on express bulk delivery of printed media, the team-up with PostNet has enabled OneLogix to leverage synergies such as offering an excess baggage service. “These combined offerings are progressing well,” he says.
New acquisitions - Press Support and Magscene - contributed to earnings for the first time, ahead of expectations. “The acquisitions complement our existing business as ME undertakes bulk deliveries while Press Support provides micro distribution of printed newsmatter and magazines,” says Lourens.
4Logix and black-empowered subsidiary Gijima, which provide logistics solutions for the rail of bulk commodities to ports nationwide, achieved solid results. Lourens attributes the success to skilled management maximising high growth opportunities in these businesses. Both subsidiaries operate in markets characterised by long-term, high revenue contracts that offset lower profit margins.
Looking ahead Lourens explains that although revenue is historically weighted to the first half of the year, he remains confident that organic growth is sustainable and will continue to boost performance for the full year. Commenting on the possible downturn of the local passenger vehicle market which could impact group lynchpin VDS, he says: “The cross-border passenger vehicle market is unaffected by a local market trends and is sustainable. This, together with VDS’s diversification into the buoyant local commercial vehicle market, should cushion VDS from any downturn in the local passenger vehicle industry.”
He concludes: “We will continue to implement strategy to take maximum advantage of the growth in our businesses’ markets and should it be appropriate in light of our vetting criteria, we will also consider earnings-enhancing acquisitions.”
OneLogix shares closed yesterday at R1,05 with the company currently trading on a PE of 10,9.
Issued by: Envisage Communications
(011) 325 5944/083 287 2771
On behalf of: OneLogix Group Limited
Ian Lourens, CEO
(011) 396 9040/ 082 440 9683
Issue date: 13 February 2007
FYI: OneLogix owns the niche business solutions supplier PostNet. The group further includes auto-logistics specialist Vehicle Delivery Services, an established leader in cross-border transportation of vehicles into Africa which also recently debuted successfully onto the local auto-logistics market. Media Express is responsible for the overnight distribution of many of SA’s major business newspapers and magazines. Press Support incorporating Magscene is the latest addition to the group and provides newspaper and magazine distribution solutions. 4Logix operates in the local and international bulk commodities rail logistics market. The group has also acted as an incubator for suppliers in its business areas and has an effective 25,1% shareholding in Gijima Supply Chain Management Services (Pty) Ltd. Gijima’s primary focus on the rail bulk commodity market complements the core business of 4Logix.