Value Group grows customers in tough economy

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Value Group grows customers in tough economy

Published Date: 2019-05-13 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

Value Group grows customers in tough economy

The distribution and logistics group has reported a sharp rise in earnings as it cut costs and found new customers.

The poor economic climate has put pressure on companies across the supply chain, from warehousing to logistics, due to competitive pricing and pressure on the rates that customers can stomach. Despite the tough environment, Value Group says its focus on restructuring costs in its freightpak and logistics divisions, improved operational efficiencies and the procurement of new customers in its warehousing, distribution and logistics divisions yielded positive results.

Its general distribution segment grew revenue by 12% to R1.74 billion in the year to end-February and operating profit increased by 26% to R102 million. Revenue from truck rentals was static but reduced costs boosted operating margins, with operating profit increasing to R56.8 million. A growing customer base boosted revenue from its retail logistics segment by 13% to R660 million and operating profit jumped 59% to R12.7 million.

Group revenue increased by 11% to R1.78 billion as it grew business from new and existing customers. It said it mitigated against a big increase in fuel costs over the past year by reducing other costs, resulting in a 6% rise in gross profit to R835 million. Operating expenses escalated by just 2% to R673 million and operating profit increased by 24% to R192 million. Net profit jumped 58% to R129 million and earnings per share rose by the same margin to 86.8c. Excluding the R19 million once-off cost of an empowerment transaction, which affected its 2018 earnings, normalised headline earnings increased by 25% to 89.2c per share.

The group said it expected to at least maintain earnings in the new financial year given the initiatives it's taken to grow its customer base and reduce costs.

Its shares didn't trade of Friday, closing unchanged at R6.60. It released its results after the close of trade. The stock rose 17% to R6.80 on 24 April after it released a trading update guiding investors on its earnings.





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