Santova to innovate for more lucrative deliveries
Logistics group Santova is on the lookout for acquisitions again, but a more immediate challenge is deploying new technologies to capitalise on the rapid changes in delivering goods to a more demanding customer base.
Santova, one of the best-performing small caps on the JSE, reported solid results this week for the year to end-February, with revenue up 4% at R329m and bottom-line profit up 10% to R71m. Net cash flow from operating activities was up 20% at R68m, underpinning a dividend declaration of 7c per share.
At an investment presentation on Thursday, Santova CEO Glen Gerber noted that consumers were shipper agnostic.
"They don’t care who delivers their goods, as long as they get them reliably, quickly and at low or no delivery cost."
But he pointed out that these customers were willing to pay a premium for value-add services such as faster delivery for high-value items.
Gerber said Santova was looking to carve out the more lucrative elements of the value chain by exploiting digital technology or new "sharing" business models.
"To meet these new customer expectations, we have spent the last 12 months expediting the deployment of intelligent technology. This is aimed at lowering costs, improving efficiency and allowing access to critical data, while at the same time freeing up time for greater client centricity," he said.
Gerber said that Santova would continue to exploit digital technology to meet the expectations of customers.
The company would also drive more efficient internal physical and digital standards as well as workflow processes to improve profitability on low-margin shipments.
Gerber also indicated that after spending the past two years on building and enhancing internal capacity, the pursuit of select acquisitions was now high on Santova’s agenda.
He said that economic zones of interest that the company could target were the US and Southeast Asia as well as looking to further entrench positions in the UK and Europe.
"Through acquisitions we are able to gain the benefits of an entire company’s prior sales and client relationships. This means that we are immediately gaining markets and clients that we otherwise may not have had access to," Gerber said.