Karooooo, the JSE and Nasdaq listed group that owns 100% of Cartrack Holdings, said Friday that its earnings per share grew strongly by 41% to R7.17 in the three months to May 31, the first quarter of its financial year.
An interim dividend of $1.08 per ordinary share was declared by the Singapore-headquartered group for the first quarter period. The share price increased 3.9% to R640 on the JSE following the release of the results - the price is also more than 50% higher over a 12-month period.
“The robust results and investment in growth, enhancements made to our cloud platform and the prospect of improved economic conditions in South Africa, give us confidence we can continue to extend our long-standing track record of profitable growth,” CEO and founder Zak Calisto said in a statement.
The number of Cartrack subscribers increased 17% to 2 047 442 at May 31, compared with 1 757 452 at the same time last year. Subscription revenue was up 15% to R964 million.
Karooooo’s operating profit grew by 34% to R300m. Cartrack delivered record operating profit of R287m, up 24%. The operating profit margin expanded to 29% from 27% in the first quarter of the 2024 financial year.
Karooooo Logistics delivered an operating profit of R13m, versus R5m at the same time last year, as it continued to scale.
“We believe Karooooo is strongly positioned for growth. We operate in a growing and largely underpenetrated market, with strong demand from customers needing to be competitive and digitalise their ground operations,” Calisto said.
He said their move to a newly built central office in South Africa was also expected to support higher organic growth in the region in the short to medium term.
In addition, south-east Asia would present the most compelling growth opportunity for the group in the medium to long term.
“A culture of entrepreneurship, technological innovation and customer-centricity, supported by a prudent capital allocation strategy focused on customer acquisition and expansion, support this positive outlook,” he said.
He said their consistently profitable business model, underpinned by a strong balance sheet and healthy cash position, provided multiple levers for expansion.
“We expect our continuous investment in our AI products, platform and customer experience to generate robust results in the future,” he said.
The group’s guidance remained unchanged. Cartrack's number of subscribers was expected to be between 2 200 000 and 2 400 000. Cartrack’s operating profit margin was expected to be between 27% and 31%. Karooooo's earnings per share was expected to be between R27.50 and R31.
“Our strategic approach to capital allocation supports Karooooo’s strong growth at scale, profitability and high cash-generation. We have ample runway to accelerate our customer acquisition strategy,” said Callisto.
At May 31, 2024, Karooooo’s property, plant and equipment had increased by R94m to R2.13bn. This was primarily due to an increase of R48m in in-vehicle capitalised telematic devices, an increase of R5m in telematic devices available for future sales and an investment of R37m in building the South African central office.
“Karooooo’s leading Operations Cloud drives the digital transformation of over 124 000 commercial clients. We... maintain a 95% commercial customer retention rate. This is across businesses... such as logistics, retail, field-service maintenance, tourism, finance, mining, agriculture, and emergency services,” said Calisto.
After allocating R37m to the new South African central office, Karooooo reported a net cash and equivalents of R950m. Karooooo repurchased 57 806 shares of its shares in February 2024 and May 2024, at an average price of $24.84 per share.
In April 2024, the board approved a resolution for Karooooo Logistics to repurchase its shares at a price of R15.2m. As a result, the group shareholding in Karooooo Logistics was 74.8%.
Carzuka had been integrated to support Cartrack operations, with the final on-hand vehicles sold off during the quarter.
BUSINESS REPORT