Fleet management company DigiCore delivers despite economic downturn

JSE-listed fleet management company DigiCore is set to launch a personal tracking unit in time for the Fifa Soccer World Cup.

However, DigiCore is still feeling the effects of the global recession, which led to lower sales volumes and a change in the mix of items sold to lower margin units. The company sought to reduce the effects of the slowdown in sales by trimming operating expenditure by 14%.

It is also continuing to invest in new areas, such as expanding into personal tracking. The launch of the personal tracking device will coincide with the games in June “for the convenience and safety of visitors to SA,” the company says.

DigiCore is also looking to expand into the North and South Americas. Distributors have already been identified and local product-approval processes have been initiated. It expects to start product shipments by mid-2010 to at least one new distributor.

“All indications are that the group has weathered the worst, with the lowest sales recorded during April to August 2009,” it says. Enquiries and sales have been increasing steadily and it is confident of a gradual recovery in its markets.

International impact

DigiCore has grown from commercial vehicle fleet management to a stolen vehicle recovery (SVR) business. Despite the recession, sales units were up 1.5% during the half year to December.

However, revenue decreased from R288 million, for the six months to December 2008, to R249 million. Net profit dropped 59%, from R56.7 million a year ago, to R22.8 million.

Export sales have decreased to only 40% of total units produced, from the usual level of more than 50%. DigiCore attributes this to a slowdown in units sold in the UK, European and Pakistan businesses, which traditionally comprise the bulk of its export sales.

In SA, its SVR business has achieved constant growth over the past two years and the company is “confident this growth will continue”.

However, DigiCore’s fleet management business suffered during the half year, in line with a slowdown in commercial vehicle sales, and has been particularly affected by the reduction in government spending.

The National Association of Automobile Manufacturers of SA’s sales figures for February show sales of medium commercial vehicles fell 34.3%, while heavy trucks and buses improved marginally by 1.7%, compared to February last year.

DigiCore hopes that its new Go Green range, which allows reporting of CO2 emissions, will support growth in the coming months.

The company’s shares were unchanged at 300c this morning.

[Info from ITWeb.co.za]