Cartrack Holdings Limited, a leading global provider of Fleet Management, Stolen Vehicle Recovery (SVR) and Insurance Telematics services has again delivered a solid operational performance with strong growth in subscribers and revenue; strong profit margins and robust cash generation.
Headline earnings and headline earnings per share (HEPS) increased to R115 million (H1 2016: R112 million) and 38 cents (H1 2016: 37 cents), respectively. In addition, the company reported a 6% increase in earnings per share.
Cash generated from operating activities was R212 million. The company declared a dividend of 20 cents per share for the six-month period ended 31 August 2016.
“Cartrack’s vision is to achieve global industry leadership in the telematics industry, by ensuring that it is the technology of choice to manage both fleets and workforces. Its mission is to provide its customers and partners with real-time actionable business intelligence, based on advanced technology and reliable data,” says Zak Calisto, Global CEO of Cartrack. “The Group continues to invest in operating capacity and distribution, aimed at future revenue growth.”
Cartrack operates in developed and emerging markets across five continents.
The Group’s global subscriber base grew from more than 462 000 to over 551 000 contracts, representing 19% growth period on period, with a strengthening order book. Fleet subscribers grew by 78 000 while SVR subscribers grew by 11 000.
The Group increased revenue by 18% to R554 million and net profit after tax increased to R119 million. The cash generating ability of the Group is reflected in the EBITDA margin of 43%.
Considerable exchange rate volatility and fluctuations in Cartrack’s operating currencies have had a R19 million impact on the consolidated Group results, without which operating profit would have been up 14% to R187 million.
The South African segment’s revenue grew by 16% in the period to R413 million, largely as a result of the strong subscriber base growth.
“South Africa has achieved record sales which validates Cartrack’s investment in operating capacity,” Calisto explains. “Our subscribers are increasingly moving towards fleet products combined with SVR, as opposed to just SVR products, as their understanding of the benefits of diverse telematics data increases.”
The segment’s gross profit margin and profit before tax margin have been maintained at 81% and 35% respectively. This is despite the fact that consumers have been under strain for some time and continue to suffer the impact of low economic growth, higher inflation and a series of interest rate hikes.
Africa continues to experience economic headwinds. Severe currency devaluations and poor economic performance have resulted in both corporates and individuals experiencing cash flow constraints. Despite this, African operations remained highly profitable in local currency terms.
“Although our subscriber base in Africa grew by 4%, consolidated segmental revenue reported in Rand decreased by 7% to R57 million largely as a result of currency fluctuations. Profit before tax decreased by 37% to R19 million,” says Calisto. “We believe that the operating capacity exists within all of the subsidiaries to remain profitable in the foreseeable future.”
In Europe, Cartrack performed well and recorded an increase in revenue of 41% to R55 million. Profit before tax decreased 27% to R10 million due to a strategic investment in operating capacity.
Cartrack’s greenfield operations in Asia-Pacific and the Middle East have grown in line with the company’s investment case for the region. Revenue has grown by 147% to R29 million period on period and the subscriber base has grown 203%. In particular, Singapore has experienced a 163% growth in subscribers and generated revenue of R23 million and profit before tax of R7 million.
“Singapore is at the forefront of Cartrack’s technology developments as it services a technology driven and data dependant society. Also, Singapore tests our ability to operate in countries with exceptionally high cost structures,” says Calisto.
Cartrack’s most recent global expansion has been the establishment of operations in the United States of America (USA). The focus of this operation will be primarily on fleets, combining all the key metrics for electronic driver logging devices required by law to be installed in long-haul vehicles in this market.
“The USA is a demanding market with healthy competition,” Calisto adds. “We are confident that our value proposition will greatly benefit US companies, yielding tangible benefits from a compliance and profitability perspective.”
The global telematics industry is growing strongly and industry penetration remains relatively low in all markets. Cartrack continues to evolve from being a specialist SVR service provider at the time it was established, to being a data intensive and analytical fleet and insurance telematics technology business.
“Moving forward, accelerated investment will be made in software and data analytical expertise to extend and enhance our service offerings to our customers. Cartrack will continue to position itself as a strong technology partner for businesses requiring actionable data. This will position Cartrack well for continued growth in the future,” Calisto concludes.