Karooooo Limited remains well positioned for growth and operates in a growing and largely under-penetrated market, with strong demand from customers across diverse industries, CEO Zak Calisto said at the release of first quarter results yesterday.
“Our robust and consistently profitable business model, underpinned by a strong balance sheet and healthy cash position, gives us multiple levers for expansion. We expect our investment in marketing and sales, and the realisation of economies of scale across our business segments, to generate robust results in the future. We remain confident in our track record of success,” he said.
Much investment had gone into the business during the quarter, he said in an online interview.
He said they had also made adequate provisions for the tough operating environment in South Africa.
“I don’t think you can say it has been easy in South Africa (from a general business perspective) for the past 24 to 36 months, and I don’t expect much improvement for the same amount of time looking ahead,” he said.
Karooooo owns 100% of vehicle tracking and logistics data solutions company Cartrack, 100% of online vehicle sales company Carzuka and 70.1% of Karooooo Logistics, where the integration of its delivery-as-a-service technology stack into the Cartrack platform will enable customers to more easily manage and enhance their logistics capacity
In the quarter Karooooo’s total revenue grew 24% to R997 million. Subscription revenue grew 18% to R836m versus the same quarter a year before.
Despite strategic investment for growth, earnings a share increased to R5.09 from R4.96. Free cash flow, which increased 39% to R158m, bolstered an unleveraged strong balance sheet. Some R19m in cash was invested in Carzuka during the quarter, and R32m went to develop the South African central office in Rosebank, Johannesburg.
Calisto said they had outgrown the present office in Johannesburg and the new building would be able to accommodate some 3000 staff efficiently over five floors, versus about 1800 staff already working at the office.
Net cash at the end of the quarter was 18% higher at R1.14bn, from R966m at the end of the fourth financial quarter last year. He said there remained significant growth opportunities.
“The principal benefits our customers derive from our platform are industry competitiveness, ESG reporting and compliance. Karooooo’s leading Operations Cloud powers the digital transformation of over 108 000 commercial customers,” he said.
The group had a 95% commercial customer retention across businesses of varying sizes in diverse geographical markets and industries, including logistics, field-service-maintenance, transport, finance, mining, agriculture, and emergency services.
Karooooo’s operating profit grew to R224m from R217m. Despite strong investment, Cartrack delivered a 5% increase in operating profit to R232m. Carzuka’s operating loss amounted to R12m from a R4m operating loss in 2022, due to investment in infrastructure and brand building.
Karooooo Logistics delivered an operating profit of R5m, well up from the R0.1m operating loss in the previous first quarter.
Calisto said these were still small contributors to the group’s performance, but they were being scaled up prudently.
Cartrack increased its revenue 18% to R853m during the quarter. Carzuka grew revenue 63% to R82m. Karooooo Logistics’ revenue increased by 123% to R62m.
BUSINESS REPORT