Labat to explore logistics growth opportunities

LISTED Labat Africa’s board believes the group is well positioned to explore greater opportunities following the exponential growth of its newly established logistics business.

Brian van Rooyen, chief executive of Labat, said the board believed current resources could be used to broadly diversify the group’s logistics strategy, which included “a seamless franchising model”.

The strategy is to make the company a leading transport and logistics company in sub-Saharan Africa.

The logistics business commenced operations in August last year, but was primarily responsible for the more than 260 percent increase in Labat’s revenue to R52 million in the year to August from R14.3m in the previous year.

“This is a major achievement for a start-up business and revenue generation has continued to grow in the subsequent quarter,” Van Rooyen said.

“The company has won some attractive new logistics contracts.”

Van Rooyen added that while the gross margin percentage from the logistics segment was lower than that of the group’s South African Micro-Electronics Systems (Sames) electronic chip business, the group in the logistics business had been exponential.

Labat reported an operating loss of R1.9m for the year to August compared with the operating profit of R255 000 in the previous year.

Van Rooyen attributed the loss to the decline in other income to R1m from R5m in the previous year.

Headline earnings a share dropped 45 percent to 1.81 cents from 3.28c. Profit after tax slumped by the same percentage to R4.6m from R8.4m.

Net asset value a share increased 82 percent to 4.73c from 2.59c.

Van Rooyen said prospects for the year ahead were excellent.

He said Sames continued to trade profitability, the development of new products was ongoing and management were confident its 10-year plan would yield positive growth for the group.

Van Rooyen said Sames had embarked on its next development phase, which entailed the recruitment of highly skilled development engineers and support staff to support the group’s growth strategy.

Following its year-end, Labat acquired a 55 percent shareholding in new logistics business Labat Kufika Logistics effective from September 1.

Van Rooyen said this was a venture with two brothers who had many years of experience in the logistics industry and Labat’s board was confident it would further contribute to the group’s growth in the logistics industry.

“We have just agreed a R40m factoring facility with Transaction Capital to support the growth of the expanded logistics business,” he said.

Shares in Labat closed unchanged yesterday at 38 cents.