Cartrack revs up dividend despite Covid


Cartrack revs up dividend despite Covid

Published Date: 2020-10-15 | Source: Stephen Gunnion | Author: Stephen Gunnion

Cartrack revs up dividend despite Covid

The company says continued investment in its business and high barriers to entry should support future earnings.

Cartrack has more than quadrupled its interim dividend as it grew customer numbers and continued to rake in annuity income.

The vehicle telematics group makes most of the money from subscriptions to its software platform, which is used for tracking stolen vehicles, fleet management and monitoring driver behaviour. Subscriber numbers rose 13% year-on-year to 1.18 million for the six months to end-August despite the distribution challenges caused by the Covid-19 pandemic. That resulted in a 13% rise in net cash generated from its operating activities to R467 million.

While its SA business remains by far the largest, with subscriber growth of 13% over the period, Asia Pacific and the Middle East is growing the fastest, recording a 28% rise in subscriber additions. Had it not been for Covid-19, which left a number of new managerial and senior operational staff stranded in Singapore, it believed growth would have been even stronger. Subscriber numbers in Europe increased by 11% while growth in Africa outside SA was muted at 2%. It said its investment in the US made a positive contribution and remained strategic in nature.

Revenue rose 16% to R1.09 billion, with 98% of that coming from subscription revenue, which was up 19% at R1.07 billion. Operating profit increased by 16% to R368 million while earnings before interest, tax, depreciation and amortisation (EBITDA) came in 20% higher at R577 million. Earnings and basic earnings per share were 21% higher at 87.2c. It increased its interim dividend by 335% to 87c per share.

Cartrack said ongoing investment in growing its business and the continued economies of scale it achieved would support its future earnings. It said there were high barriers to entry in most of the countries where it operated, while markets remained materially under penetrated.

It said it wasn't able to share a firm outlook for the year due to the current uncertainty.

Cartrack's shares rose 4.8% to R44.01 yesterday, adding to a 6.3% gain on Monday.

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