Santova ‘well positioned for hard six months’

Logistics company Santova has opted to hang on to its cash rather than pay a 2020 dividend as the Covid-19 pandemic disrupts supply chains.

The group moves a variety of goods for customers in industries such as clothing, technology and food and beverages.

Growth in Santova’s UK and Europe operations helped lift net profit 6.4% to R64.9m in its year to end-February 2020, though the SA operations weighed on overall group performance.

The company said net profit of its SA operations fell 43.7% to R15.1m in 2020 due to poor economic growth, lower consumer spending and lower levels of general business confidence.

Santova has opted not to pay a dividend, having paid out 7.5c per share previously. It has 161million shares in issue.

Independent analyst Anthony Clark said full-year performance at Santova, which has been overlooked and disregarded by the market for quite some time, was commendable.

Earnings growth of more than 40c per share showed the resilience of the business model. That cash on hand grew significantly year on year shows that the company was positioned for the challenging six months ahead, he said.

Earnings per share rose 6.7% to 40.77c per share, while cash and cash equivalents rose R44.6m to R134.4m. Cash generated from operations rose R85.4m to R133.2m.

Santova’s financial results were completed before the Covid-19 lockdown, and since the end of March the entire world and the global supply chain have ground to a halt, ports have not been working and there has been no international shipping, Clark said.

“I think the next six months are going to be extremely challenging. That they have significant amounts of cash on their balance sheet is a prudent move for the company ... and so far it has been fairly resilient,” he said.

Santova’s share price gained 7.14% to close at R150, giving the company a market share of R242m.