Karooooo free to push Asia growth

Management of Cartrack’s owner now able to travel to Indonesia, the Philippines and Thailand in pursuit of a potential 100-million market

Karooooo, the holding company for vehicle recovery and fleet management group Cartrack, says it is focused on growing its business in Southeast Asia as lockdown restrictions loosen up, allowing it to beef up its effort to chase a market of over 100million potential customers.

Karooooo, the holding company for vehicle recovery and fleet management group Cartrack, says it is focused on growing its business in Southeast Asia as lockdown restrictions loosen up, allowing it to beef up its effort to chase a market of over 100million potential customers.

The company says Covid-19 and social unrest in SA failed to derail its rapid subscriber growth, with numbers up by a fifth in its first half ending August. Now the focus is on further expansion, particularly in Asia.

Zak Calisto, CEO of Karooooo, told Business Day: “It’s been difficult to move during lockdown. We’ve just received permission [to] take management into Indonesia, the Philippines and Thailand.”

Senior management from SA, Europe and Singapore were meant to move into these countries to drive the expansion effort but were held back by Covid-19 restrictions, which had stopped them from getting work permits and visas.

“We need more people with more knowledge on the ground,” said Calisto.

This comes as the company reported that profits came under pressure from increased marketing costs and its recent listing in the US, but revenue rose 18% to R1.28bn year on year in the group’s first half. Its subscriber base grew by 20% to more than 1.4-million, with almost 1.1-million of these in SA.

Calisto said the unrest in July slowed things but despite those losses, the company grew its customer base in SA by 21%.

“All our facilities in KwaZuluNatal

and a lot of our facilities in Gauteng were closed in July, so our sales for the month were very low,” he said.

“There was also the second impact, which was a lot of small business were already struggling with Covid-19, and then they just closed after that unrest. Specifically those in KZN.”

Karooooo is positioning itself as a leading global mobility software-as-a-service platform that provides real-time data analytics to the transport and logistics sectors.

In February, shareholders in Cartrack approved a plan to roll the company into Karooooo, which is founder Calisto’s investment vehicle, with the cost of the initial public offering coming in at R85m.

The complex deal was done to open up Calisto’s investment vehicle to larger pools of capital on offer in the US market. On listing on the Nasdaq in April, the group raised $33.8m (R482m).

Profit for the first half decreased 12% to R231m, with the group accounting for R10m in listing costs in the first quarter of the period.

Chris Logan of Opportune Investments said it was once again a very solid result, “particularly when you consider the impact of the Covid-19 restrictions, which has clearly constrained the subscriber growth and then also the riots.

“Going ahead Covid-19 should be far less of a problem and we should be able to see Southeast Asia really take off where they see 100-million potential customers.”

NEW CUSTOMERS

Valued at about R15bn on the JSE and headquartered in Singapore, Karooooo said it was investing in future growth. Operating expenses increased by 31% to R503m, with the group gearing up for a significant recruitment drive focused mainly on sales, customer experience and research & development (R&D).

Sales and marketing picked up 60%, and R&D 39%, with Karooooo saying on average it takes six months for the former to translate into new customer acquisitions.

Karooooo’s shares were up 4.35% to R479.99 on Friday.

PROFITS CAME UNDER PRESSURE FROM INCREASED MARKETING COSTS AND ITS RECENT LISTING IN THE US