Karooooo’s impressive results and big growth plans

Zak Calisto

Karooooo released its results for the first quarter ended 31 May 2022 on Wednesday, revealing record earnings and cash generation from operating activities.

Revenue was up 28% to R801 million, profit increased 44% to R156 million, and earnings per share increased by 42% from R3.49 to R4.97.

The strong performance confirms that Karooooo, which owns Cartrack, Carzuka, and Karooooo Logistics, has a robust business model.

The company’s track record also shows that it has the ability to scale operations in different market conditions.

Karooooo CEO Zak Calisto said traction in their Southeast Asia operations was particularly encouraging.

As Covid-19 disruptions eased, Karooooo accelerated its investment in its operations in this region.

The company is gaining support from big companies in Southeast Asia, including Coca-Cola, which selected Cartrack as their technology partner in the Philippines.

Karooooo’s focus on Southeast Asia is driven by the tremendous growth opportunities in this market.

The chart below shows the market size and the number of subscribers Karooooo has in each region.

Early stage of a large and long-term growth opportunity

Considering the low subscriber base and market size, it is not surprising that Asia and Europe saw the strongest growth. Asia grew 25% quarter-on-quarter, while Europe grew by 15%.

Calisto told Daily Investor that Asia currently presents the biggest opportunity for growth, closely followed by Europe.

As such, Karooooo will continue to allocate more capital and resources to these regions to exploit those opportunities.

The company also intends to grow its subsidiaries Carzuka and Karooooo Logistics organically, and he expects both to be profitable by 2024.

Calisto is particularly bullish on Asia because of its competitive advantage in the region.

He said there are many competitors in Asia, but they do not have the same technology capability and sophistication as Karooooo.

It creates an excellent opportunity for Karooooo to capture a large market share in the short term while its competitors are playing catch-up on the technology front.

Europe has a different competitive landscape. It has been difficult for companies similar to Karooooo to gain traction because of cultural differences.

Karooooo aims to address this challenge by creating a direct relationship with the end customers in each country.

Although Karooooo has a far bigger penetration in South Africa than in Asia and Europe, with one in every ten vehicles registered on the company’s tracking cloud, Calisto still sees a lot of potential for growth in the country.

It all bodes well for the technology company that continues to deliver an impressive performance in all the markets it operates in.

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