Value Group is sitting pretty

Johannesburg - Listed logistics and transport company Value Group is evaluating and actively pursuing a number of acquisition opportunities.

Steven Gottschalk, the group’s chief executive, said yesterday that the company was seeking to invest not only in businesses that complemented the group’s existing divisions, but also in those that would diversify risk and grow revenue streams.

Gottschalk added that the group, through its acquisitive growth strategy, aimed to increase its volumes by consolidating the logistics requirements of the acquired businesses into its existing infrastructure.

He said a number of ongoing sustainable cost saving initiatives implemented by the group in the previous year were bearing positive results and had resulted in labour, fuel and maintenance savings contributing to gross profits increasing by R32 million to R395.8m in the six months to August, and gross margins improving to 39.6 percent from 36.9 percent.

“These included restructuring of the workshop facilities under new management; the implementation of planning and routing tools to optimise load building to increase vehicle space utilisation; the ongoing automation of manual processes throughout the operation and administration; the procurement of a number of new fuel efficient vehicles to align the reduced volume requirements of the customer base; and streamlining resource allocation to volumes resulting in improved productivity in the distribution operations,” he said.

Positive results

Gottschalk added that the group’s strategy to grow the blue chip customer base was yielding positive results and various additional services had been sold to existing customers in the reporting period, but trading conditions continued to be extremely challenging.

He said the economy had deteriorated further with negative growth reported in the second quarter.

The termination of non-profitable contracts in the previous financial year affected current revenue, resulting in revenue in the six months to August increasing marginally by 2 percent to R999.8m from R984.9m.

Operating profit improved by 75 percent to R28m from R16m.

Gottschalk attributed this improvement to the partial containment of the increase in operating expenses to 5.1 percent, which was driven predominantly by increased employment costs and general overhead cost escalations.