Customer base growth spurs Value Group to record results

GROWTH in the customer base of listed logistics and transport company Value Group and annual increases enabled the group to produce record results in the six months to August.

Steven Gottschalk, the group’s chief executive, said yesterday that its board anticipated that second half earnings would be maintained, resulting in an improvement in earnings for the 2019 financial year.

This was despite expected poor growth and high unemployment rates coupled with the recent hikes in fuel prices constraining consumer disposable income and associated demand over the festive season, he said.

Gottschalk said the group’s management had implemented a range of initiatives to mitigate these challenges, which should be offset by the growth in the customer base.

Value Group yesterday reported a 78 percent increase in normalised headline earnings a share to 31.6 cents in the six months to August from 17.8c in the previous corresponding period.

Revenue increased by 11 percent to R1.36 billion from R1.23bn.

Operating profit, before the oneoff costs associated with the group’s broad-based black economic empowerment transaction in the prior period increased by 72 percent to R71.3 million from R22.5m, with the operating margin improving to 5.2 percent from 3.4 percent.

Gottschalk attributed this to the initiatives in the previous year to reduce operating costs and ongoing stringent cost controls, which had resulted in operating costs increasing by only 1.6 percent to R351.6m from R346.1m.

An interim dividend a share of 13c was declared, which was 63 percent higher than the 8c declared in the prior period.

Gottschalk said management’s focus on conversion of profits into sustainable cash flows remained a priority and had yielded positive results in the reporting period, with cash generated by operations improving by 35 percent to R138.5m from R102.8m.

Despite increased tax and dividend cash outflows, an improvement in working capital management resulted in cash flows from operating activities increasing by 20 percent to R79.7m from R66.4m.

Shares in Value Group closed 0.80 percent lower on the JSE yesterday at R4.96.