Karooooo, a Nasdaq and JSE-listed distributor of mobility asset management solutions, has reached an agreement with BMW and Mercedes-Benz in Europe to fit vehicles with telematic equipment, and another five to six vehicle manufacturers might be signed up in the new financial year, CEO and founder Zak Calisto said yesterday.
Interviewed at the release of Karooooo’s results yesterday, he said the equipment was required to comply with EU legislation to monitor driving safety such as not driving continuously for more than four hours at a time.
“Many other companies are working hard to be able to supply the right equipment but we have so far been the only company that has the equipment that complies with EU standards,” he said.
He said financial benefits from these agreements may take a year or more to be realised. Their well-established team in Europe would be expanded to about 600 from about 400 currently to deal with the additional work.
Meanwhile, in the fourth quarter and financial year-end to February 28, Karooooo maintained its track record of growth at scale, profitability and cash generation of over a decade, and the trend seems likely to continue in the new financial year, he said.
“The financial year has been more challenging than we expected. However, we met our expectations for Cartrack, despite the difficult operating conditions, achieving strong subscription revenue growth and robust margin expansion in both gross profit and operating profit,” he said.
“Load shedding affected us more than we expected. We have some 2 000 people on the road at any time and with traffic lights not working and other delays such as at businesses that don’t have generators, our work gets delayed and productivity has suffered,” he said in a telephone interview yesterday.
Subscribers for the vehicle-tracking business grew 13% to just over 1.7 million in the year to end-February. Revenue increased by more than a quarter, while operating profit was 26% higher at R882 million.
Growth in South Africa, which accounts for about three quarters of subscribers, was up 11%.
Subscription revenue grew 18% in the fourth quarter to R794m and by 17% to R3 billion. Earnings per share increased 51% to R4.70 for the fourth quarter and up by 27% to R19.29 for the full year.
Calisto said good free cash flows with their strong and unleveraged balance sheet allowed them to declare a record cash dividend of $26.3m (R495m) or $0.85 per share. He said, for now, the main focus was to grow organically.
Free cash flow for the year rose 44% to R547m. Net cash and its equivalents were 35% higher at R966m.
Singapore-based Karooooo, founded by Calisto in 2001, started off as a vehicle track-and-trace company and its services now include software mobility solutions for fleets and insurance analytics, security and safety for commercial customers. Subsidiaries include vehicle-trading business Carzuka and Karooooo Logistics.
Calisto said demand was being driven by customers who were digitalising operations to gain a competitive advantage.
He said the growth was also due to an entrepreneurial, innovative, agile and customer-centric culture, something the group was building by also employing top graduates.
Karooooo’s Operations Cloud powers the digital transformation of over 105 000 commercial customers, up from over 88 000 customers a year ago. Commercial customer retention was at 95% across businesses of varying sizes in diverse geographical markets and industries, including logistics, field-service-maintenance, transport, finance, mining, agriculture, and emergency services.
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