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Johannesburg - Logistics group Cargo Carriers [JSE:CRG] plans to increase its exposure to the local construction industry, which it believes has reached its lowest point and is poised for growth.
Cargo Carriers, which reported full-year results on Tuesday evening, deals in the transport of industrial, agricultural and consumer goods in sub-Saharan Africa.
Co-CEO Murray Bolton told Fin24.com that strict cost-cutting through the downturn had placed the company in a position to look at acquisition opportunities.
"We have out feelers out for something in sub-Saharan Africa," said Bolton, adding that Zambia and Angola are preferred investment destinations.
Currently, Cargo Carriers delivers through the region but operates only in South Africa and Zimbabwe, which makes up 5% of turnover.
"We also want to expand our transportation of industrial powders such as cement and fly ash used in construction," said Bolton.
Bolton said that Cargo Carriers would be entering the construction sector at its lowest ebb, which would minimise the risk.
‘No double dip’
The group will dip into the R88m cash on hand it has to facilitate a transaction as well as make use of a loan facility.
Cargo Carriers reported a 44% rise in earnings to 128 cents per share in the year to end-February 2010.
The company said that revenue fell 8.1% to R443.8m in the period under review, while costs declined 11.3% to R386.7m, resulting in a net widening of margins.
"We took cost containment very seriously and ended some of our contracts which weren't performing," said Bolton.
Dividend cover of four times was maintained, and as a result annual pay-out more than doubled to 20c/share. The group plans to maintain this dividend level provided the economic recovery progresses smoothly.
Cargo Carriers is exposed to economic growth from grass roots levels due to its transportation of raw materials.
Bolton said the group has noted increased volumes of steel, cement and chemicals moving in the regions in which it operates, which bodes well for steady economic recovery.
"We will make it out slowly and we aren’t expecting to see a double dip," he said.
- Fin24.com
