Logistics and supply chain group OneLogix delivered moderate half-year results, which it said were affected by global supply chain challenges, a freak hailstorm and the July civil unrest.
The company, which is preparing to delist after trading on the JSE for 22 years, said on Thursday it experienced anaemic demand for its vehicle storage facilities in the six months to end-November, highlighting the effect of the global supply crunch that has fuelled a surge in inflation worldwide.
Global computer chip shortages are behind the bottlenecks, which have affected the delivery of passenger and commercial vehicles.
“In addition, the on-boarding of additional vehicle storage facilities as part of the third phase of the Umlaas Road logistics hub ‘Umlaas Road Phase 3’ in January 2021 contributed to an additional R32m in lease-related costs in the period compared to the prior period,” it said in a statement.
Group CEO Ian Lourens said that as the firm bore the substantial costs of the Umlaas facility, Covid-19-induced disruptions cut the global supply of semiconductor chips and lead to to a global shortage of vehicles.
“So at the very same time as this [Umlaas facility] came on board we got knocked by an international trend where the supply of motor vehicles dried up, that was a double whammy for us,” Lourens told Business Day.
OneLogix owns several businesses involved in transporting cars for manufacturers and heavy-duty trucks, as well as liquids and gases. It also provides warehousing facilities for importers and exporters of bulk materials.
The weak demand for motor-vehicle storage coincided with a slow recovery in local vehicle sales as lockdown restrictions eroded consumer spending.
“Until the situation normalises, which could be at least a year away ... OneLogix will continue to be hamstrung as the bulk of the money is still derived by moving cars around,” said Anthony Clark an analyst at SmallTalk Daily.
Nevertheless, group revenue increased 21% to R1.49bn while earnings before taxation, depreciation and amortisation rose 14% to R213.7m.
Headline earnings per share, the main profit measure that excludes one-off items, plunged 89% to 1.1c. The company opted not to declare a dividend.
In the review period the company was also affected by the July riots that affected productivity for at least two weeks and cost it about R20m, while the costs incurred to secure operations resulted in a decline in revenue and profitability by an estimated R10m. The arson and looting resulted in the group losing four fully loaded general freight vehicles in the OneLogix Projex business.
Also, a freak hailstorm in September caused considerable damage to passenger vehicles stored at the Umlaas Road facility, resulting in an estimated cost of R25m, net of insurance proceeds.
“At first glance, it would appear it was a disappointing result but our view is that if you take those factors into account, it wasn’t a great result but it was a pleasing result given the circumstances.”
A few days before Christmas the board announced a general buyout offer at R3.30 a share that would lead to the delisting of the company valued at R772m.
Delisting
“We’ve been listed for nearly 22 years and the truth is that we have never really used the stock exchange for its primary purpose and that is to raise capital by way of issuing shares. We have always expanded by using our own cash or alternatively getting into debt to fund it,” Lourens said.
“The share is so tightly held that there is no real trade, proper trade in the shares and we don’t think it reflects the proper value of the business.”
For Clark, the R3.30 offer is fair, given that the company’s net asset tangible value is R3.38.
“Perhaps the best situation for the company is to be bought out and I think the R3.30 share price is ultimately fair at these levels ... very few companies ever get bought out at close to net tangible asset value,” he said.
Lourens said management and the board were working to complete the delisting “sooner rather than later” without giving an exact timeline.
OneLogix shares were little changed at R2.95 on the JSE. Year-to-date it has declined 1.67%.
Update: February 3 2022
This story has been updated with additional information and analyst comment.
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