Cargo Carriers aims at good firms without capital to expand

CARGO Carriers, the JSE-listed transport company, said this week it was shopping for potential acquisitions as the economic storm showed signs of calming down.
CEO Murray Bolton said the group had up to R90m cash in hand and bank facilities to snap up any acquisition opportunity. And he did not rule out the possibility of raising capital via the stock market, saying a rights issue would depend on the size of the acquisition.
Bolton said Cargo Carriers was focusing on businesses with an annual turnover of more than R50m. “we have contacted some potential acquisitions to find out if they are interested in selling the business to us.”

But, he said, the company was “not in firm negotiations”. With the local economy showing signs of stability, Cargo Carriers’ announcement signals that a wave of consolidation might be under way in the transport industry. Recently, Imperial Holdings indicated it too was on the acquisition trail. And an international logistics group has made an offer for Super Group.

Bolton said the group had to wait some time before business conditions were right and allowed it to take advantage of acquisition opportunities as they arose.
Some signs of recovery in volumes since March had emerged, he said: “It has been slow growth, suggesting that we are not in the doldrums.”
Like its peers, Cargo Carriers had not escaped the recession, which caused a severe slowdown in volumes and loss of revenue. But transport firms with a stronger financial footing have fared better than their indebted counterparts.
“The company’s strategic position and strong balance sheet will ensure that the company will weather the current business conditions and be in a position to take advantage of growth opportunities that arise,” Cargo Carriers said when it released financial results for the year to February.

Bolton said yesterday there were many good businesses that did not have capital to expand and were battling to service debts.
“We are concentrating on businesses that are fundamentally sound, but are struggling financially,” he said. These would be businesses that had been hit by the decline in volumes and had difficulty in accessing credit.
Potential acquisitions, he said, hinged on whether the target had good contracts. The initial thrust was to look for businesses to which the company could add value and those that fit in with the existing network.

Cargo Carriers, he said, sought to double turnover to R1bn from R500m over the next five years – a sales target that would be achieved through organic growth and the acquisitions it decided to pursue.
Bolton said the firm intended to expand its African footprint, particularly in sugar cane-growing regions such as Mozambique, Malawi and even Kenya.
Cargo Carriers had not considered looking for acquisition opportunities outside Africa, he said. ~ Artwell Dlamini, Transport Correspondent