Logistics group OneLogix reported a profit decline for the first time in 11 years, owing largely to the listless domestic economy and the ramifications of the worldwide Covid-19 lockdown, says CEO Ian Lourens.
“We faced a very poor economic environment in the first ten months and then Covid hit us in the last two months and overshadowed this fact.
“Since then, we have come out of Covid fairly well. Every one of our businesses is battered, but still standing and strong. All of them made a profit. Presently, we are running better than we did last year, which is testament to the fact that we have the right strategy in place.”
Lourens says the Covid-19 pandemic compromised revenue for the year ending May 31 by roughly R170-million, and profit before tax (excluding property impairments of R5-million) by some R30-million.
Rightsizing interventions during this period included freezing nonessential capital and operating expenditure, a re-evaluation of fleet use, salary and wage cost reduction measures, relief measures from suppliers and debt providers and accessing State financial support schemes.
Some 5% of staff, mainly in the abnormal logistics segment, were retrenched in the new financial year at a cost of about R9-million.
In total, OneLogix saw revenue decrease by 4% to R2.62-billion, compared with the previous financial year.
Operating profit, excluding capital items, decreased by 34% to R119.5-million.
OneLogix expects the final completion of Phase 3 of the Umlaas Road logistics hub towards the end of the calendar year at an estimated total cost of R310-million.
The group has, however, also entered into a R310-million sale and leaseback agreement for the Umlaas Road Phase 3 properties.
The proceeds of the disposal will be used to settle a portion of the company’s interest-bearing borrowings, improve liquidity, unlock capital and enhance OneLogix’s black-empowerment credentials.
“We are a logistics company,” explains Lourens. “It is important that we have this facility, as it allows us to expand our product offering and integrate into our customers’ supply chains. Also, nobody was going to develop this facility for us and so we had to fund it ourselves.
“It doesn’t, however, make sense for us to own it, so now we sell and lease it back. We don’t want to be the owners. We don’t want our money tied up in property. We want to realise the cash we invested and invest it in other areas of our business.”
Looking ahead, Lourens believes the new financial year will be tough.
“We have done our homework in each of our big markets. Around 75% of our profit comes from the liquid bulk, agriculture and motor vehicle industries.
“Agriculture is strong, and we think we can improve in that segment. Liquid bulk will probably stay the same, or may be a bit weaker, while motor vehicles is the same now as it was last year. So, on balance, I think we are looking at a pretty flat year.”