Pioneer said its assets will increase by $12 million after the acquisition of Unifreight
Business Reporter
Zimbabwe Stock Exchange listed Pioneer Corporation Africa expects revenue to grow by $21 million this year after completing the purchase of fellow transport and logistics concern, Unifreight Limited. Management expects near doubling of group revenue to also impact positively on the company’s bottom line, which will be complemented by increased benefits from cost, structural and strategic initiatives in 2013.
Group acting chief executive and finance director Mr Gary Smith told an analysts briefing for the group’s 2013 financial results that the enlarged transport and logistics group anticipates a $21 million boost in revenue.
“The revenue of the group will now increase by at least $21 million in 2014 and the combination of businesses will also result in improved profits as Unifreight has consistently produced profits in recent years,” he said.
“We are very excited and confident that this will provide us a greater platform to achieving a larger market share, improve our synergies within the group, share costs and produce better results for our shareholders for years to come,” Mr Smith said yesterday.
Earlier, Pioneer said its assets would increase by $12 million after the acquisition of Unifreight.
The group reported assets at $35 million from $17 million in 2012.
The sharp increase in total assets was however also due to an increase in new buses (15) and other fleet additions in Botswana and Pioneer Transport as well as acquisition of remaining assets in the foreign subsidiaries.
The trading results for Unifreight could not be incorporated into the 2013 statements of financial performance in line with the relevant accounting regulations.
Group revenue for the period to December 2013 dipped by 11 percent to $23,6 million and condemned the group to a $3,2 million operating loss during the period under review against $37 000 profit the prior year.
Loss for the year to December 2013 came in at $574 000.
Mr Smith said foreign subsidiaries continue to perform well, accounting for 44 percent of revenue and an operating profit for $35 000 in 2013.
The foreign business comprises PXL Freight and Logistics South Africa, Pioneer Clan Botswana and Mavambo Coaches (SA).
Some local operations performed better in 2013 despite the challenging operating environment, but Pioneer Transport contributed the most to operating loss.
The passenger business operations continue to be affected by depressed bus fares due to prevailing economic conditions although occupancy remained constant due to new buses on local and international routes.
Revenue has already registered a 7 percent growth.
The poor performance at Pioneer Transport resulted in a change of management and it is expected that this will result in significant turnaround of the division’s fortunes.
Mr Smith said the impact of a tough environment impacted on the group, but management has reacted swiftly and has started to note changes in performance.
“We are already seeing turnaround in the fortunes of that business with both Pioneer Transport and Coaches recording profits in January 2014,” Mr Smith said.
Going forward, the group is looking at cost suppression focusing mainly on fuel, which equates to about 30 percent of group revenue and staff reduction.
The group’s administration came in at $11 million from $11 million in $10 million in 2012 will be key.
Investment will soon be made into the fleet and immediately focusing on contracts business, passenger buses and freight and logistics operations in South Africa.
Further, the group will explore investment and contract opportunities in Zambia while efforts will also be directed toward increasing the group’s footprint in Botswana.
“(The year) 2014 promises to be a watershed year for the group, considering the combination of Unifreight business into the Pioneer Africa Corporation and the various initiatives we are considering for the group,” Mr Smith said.
Pioneer will pay $7,2 million for the acquisition of fellow industry player Unifreight in a mega-deal that will restore its leading position in the logistics business.