Roy Cokayne
Leasing and capital equipment company Eqstra still has an appetite for selective complementary acquisitions and further diversification in addition to organic growth.
Walter Hill, Eqstra’s chief executive, confirmed this yesterday when the group released a strong set of annual financial results for the year to June.
Eqstra made a hostile bid in December last year for the 67.2 percent of listed civil engineering firm Protech Khuthele it did not already own with the support of Protech’s BEE trust. The offer lapsed on July 31 because Eqstra was unable to fulfil the suspensive conditions.
Yesterday Eqstra reported a solid financial performance in the year to June despite tough market conditions, global commodity price weakening and domestic economic uncertainty.
An improved operating performance resulted in headline earnings a share increasing by almost 35 percent to R1.04 from 77.2c in the previous year.
Revenue rose by 11.6 percent to R9.09 billion and operating profit increased by 16 percent to R1.04bn. Cash generated from operations increased by almost 31 percent to R3.16bn.
A gross cash dividend of 36c a share was declared, up 29 percent from the 28c dividend declared in the previous year.
Hill said the company’s strategy of providing long-term leasing of mobile assets and related value-added services to clients’ operations continued to prove its resilience.
All divisions maintained strong order books, totalling R19bn. Good prospects for increased client penetration from sales of higher-margin, value-added products would continue to underpin growth.
Hill said the company ensured that its revenue streams remained sustainable, with the industrial equipment division increasing revenue-generating asset fleets by 26.4 percent and the fleet management and logistics division by 8.1 percent.
This fleet expansion would result in long-term annuity revenue and earnings, although it had hurt profitability in the short term.
The proactive labour relations management implemented in the previous year resulted in no direct industrial action at operations for the year under review, but in the current labour climate “this area will require ongoing effort to maintain a harmonious working environment”.
Hill said that although the domestic economy would remain under pressure, demand from Eqstra’s corporate client base should remain resilient.
Eqstra shares rose 4.57 percent to close at R7.32 yesterday.