Strong organic growth in all operations at AltX-listed OneLogix propelled the group to record results for the year to May 2008 despite negative economic conditions in the country. OneLogix outperformed expectations with revenue almost doubling by 95% to R512 million from R263 million in the previous year. Vehicle Delivery Services (VDS) remained the key growth driver following expansion into complementary markets leveraging its established foothold in auto-logistics. The inclusion for the full year of recent acquisitions Press Support and Magscene, further boosted performance.
Operating profit increased by 79% to R62,4 million, with net profit higher by 72% at R35,9 million. Growth in headline earnings translated to 13,6 cents per share, a 42% rise on the previous year.
CEO Ian Lourens says the positioning of the group’s businesses in buoyant niche markets should continue to ensure growth.
Star performer VDS posted revenue and profitability at an all time high despite escalating fuel prices and a contraction in the local passenger vehicle market. Lourens says the key to the company’s exceptional performance is advance strategic planning. “Over the past few years we have invested heavily in logistics, IT and systems and people, which is now enabling VDS to secure increasing market share,” he says adding that focus on optimising efficiencies is also contributing to a larger share of the market regardless of the slowdown in vehicle sales.
Further, anticipating the impact of a downturn in the car industry, VDS successfully expanded into the local commercial vehicle market through Commercial Vehicle Delivery Services (“CVDS”). He explains that CVDS concentrates on trucks larger than 3,5 tonnes which are required to be transported using individual drivers rather than bulk logistics aboard large vehicle carriers. “CVDS therefore exposes OneLogix to the fastest growing sectors in South Africa including construction and mining and so positions the group for future growth.” In addition, VDS’ increasing presence in the cross-border auto-logistics market has yielded benefit for the group.
According to Lourens while escalating fuel prices do affect margins at VDS and CVDS, contracts pass on the increases to clients to an extent.
PostNet, servicing the high-growth SME market with basic business services, reported its fourteenth year of successive growth. Lourens says PostNet is well established and fairly resilient to market cycles. He says that forward thinking has resulted in benefit for the group here too. “In 2004 we began revitalising internal processes to more proactively identify and pursue expansion opportunities. Three years later this is reflecting in an enhanced services offering and improved profitability.” He points out that the award to PostNet of the distribution rights for the second fixed line operator, Neotel, is an exciting development which should spur further growth going forward.
Printed media has also proved a successful growth avenue for the group. New acquisitions Press Support and Magscene outstripped expectations. “The new businesses have integrated easily and with a yearly distribution base of over 30 million newspapers and magazines, have significantly strengthened OneLogix’s foothold in this niche market.” OneLogix also owns Media Express, an express delivery service for some of the leading titles in the country including major daily newspapers.
Although cautious, he is not concerned about a material impact of reduced consumer spend on the companies’ offerings “as Press Support continues to target tourist gateways including airports where it has a strong foothold in anticipation of increasing tourism, and Magscene’s spread of titles makes it quite defensive against trends and cycles.” However he says management will nonetheless intensify concentration on refining efficiencies to improve profitability.
He is also pleased with performances at 4Logix and black-empowered subsidiary, Gijima. “Growth in these businesses is driven by long-term contracts with a high revenue nature to offset low margins.” The businesses provide logistics solutions for the rail of bulk commodities to ports nationwide.
Lourens is optimistic about the group’s organic growth prospects. “Our businesses are sustainable, supported by strong and growing management teams, established infrastructure and well-defined business processes. These organisational strengths, coupled with competitive offerings to high growth niche markets, position the group to weather the downturn in the economy and continue on a positive growth path.” He concludes that current economic conditions could proffer good acquisition opportunities and the group will continue on the lookout in this regard.
OneLogix shares closed yesterday at 86 cents a share, putting the company on a current PE of 7,35.
Issued by: Envisage Communications
(011) 325 5944/082 497 9827
On behalf of: OneLogix Group Limited
Ian Lourens, CEO
(011) 396 9040/ 082 440 9683
Share code: OLG
Issue date: 20 August 2008