New acquisitions fuel Unifreight rebound

BY SHAME MAKOSHORI

ZIMBABWE Stock Exchange (ZSE)-listed logistics giant Unifreight Africa Limited says it has tapped into several spin-offs unlocked by last year’s acquisitions of agro-industrial dealer Zimplow Holdings Limited’s businesses.

Chief executive Rob Kuipers told businessdigest that gaining a foothold into a strategic operation like Zimplow had unlocked value for one of Zimbabwe’s largest transportation operators.

But the highlight of the transaction that was concluded late last year was that a bull run soon followed with the decades-old giant’s share price advancing 7 000% in the past year. The bull run placed Unifreight among the biggest movers on the stock market in the past year.

Under the deal, Zimplow acquired two Unifreight subsidiaries to back its diversification strategy.

These included Tredcor Zimbabwe, where Unifreight controlled 51% shareholding and Birmingham Investments in which the logistics giant held full control.

Unifreight took over 18 399 564 newly issued Zimplow shares in exchange for its 51% shareholding in Tredcor.

It also assumed control of 15 774 446 newly issued shares in Zimplow in exchange for its stake in Birmingham Investments, according to a statement released by Unifreight before the deal was put before a shareholder vote.

“We were swapping some of our assets that were not working very well for us for a shareholding in Zimplow,” Kuipers said, speaking exclusively to businessdigest.

“For us it was transferring non-liquid assets to liquid assets. But quite strategic from their point of view was that the tyre business fits in with their agro-business, as well as the building that we sold to them in return for the shareholding. So they will get more utilisation out of what they bought from us.

“Before we had a shareholding in businesses that we had no control over and that didn’t work very well for us. I think that (the benefits) have been reflected in our share price. We are quite pleased with our share growth — 7 000% growth, and we are a top riser on the Zimbabwe Stock Exchange.”

He said an extensive capital expenditure programme would be underway soon, as the firm prepares to bolster the business’s capacity to move cargo across Zimbabwe.

“Our immediate plan is fleet replacement,” Kuipers said.

“We are looking at buying at least another twelve 30-tonne units (hoses) and another twelve 7-tonne units and about 50 trailers.

“We have 220 trucks and another 250 trailers and the average age of the fleet is about four and half years. We are averaging about 700 tonnes per night (in terms of freight shipped across Zimbabwe).”

Unifreight posted an inflation adjusted profit before tax of $19 million (about US$226 000) during the half year ended June 30, 2020 despite the impact of the Covid-19 pandemic on the economy.

Chairperson Peter Annesley said although the freight company was disappointed that it had not achieved targets due to the pandemic, it had remained profitable.

“Our half year results for 2020 were slightly disappointing versus our forecasted figures, but given the completely unexpected downturn created by Covid-19 shutdowns in April and May, we are pleased to report an inflation-adjusted profit-before-tax of ZW$19 million, which is 18% above prior year,” Annesley said.

“Given the volatility of the reporting currency making the results very difficult to understand, a very good measure of performance is volume of which our tonnage was 22% down on prior half year.

“Given that some of our customers were shut down completely and many others were below 50% of normal trading volumes, I think we can be very grateful that we came out relatively unscathed and were able to remain profitable,” he said.