- Defying Odds: $90M profit despite 12% rise in operating costs
- Innovative Solution: Introduction of 4PL SBU to subcontract excess volume to third-party transporters
- Growth Strategy: Prioritizing fleet expansion into cross-border operations, aiming for 100 assets by year-end
Harare- Unifreight Africa Limited is strategically diversifying its operations to mitigate the challenges posed by rising operating costs, which surged by 12% in the first half of 2024.
This increase, driven primarily by escalating vehicle operating costs and premises-related expenses, has necessitated innovative solutions to enhance profitability and sustainability.
One of the key initiatives is the introduction of a new 4PL (Fourth-Party Logistics) Strategic Business Unit (SBU), aimed at subcontracting excess volume to third-party transporters in the region.
The introduction of the 4PL SBU is particularly promising, allowing Unifreight to leverage existing relationships with third-party transporters. This initiative will not only help manage excess capacity but also provide a buffer against fluctuating operational costs.
By subcontracting logistics tasks, Unifreight can optimize its resources, enhance service efficiency, and ultimately pass on cost savings to customers.
To enhance its market position and capacity, Unifreight is prioritizing fleet expansion into cross-border operations, aiming to have 100 assets operating across borders by year-end. This strategic move is expected to bolster its service offerings and increase revenue streams.
Zimbabwe's trucking industry faces significant hurdles, including a prevailing monopoly in the ethanol market leading to high prices, high fuel taxes, and inadequate fuel infrastructure.
These factors, coupled with one of the highest vehicle registration fees in the SADC region—US$1,560 compared to US$132 in Zambia—have created an arduous operational landscape.
The country also endures some of the highest fuel prices in the region, with gasoline costing US$1.53 per litre in Zimbabwe as of August, contrasting sharply with lower prices in South Africa (US$1.30) and other neighboring countries.
As a result, fnancially, Unifreight's revenue decreased to ZWG164 million from ZWG169 million last year, while operating costs rose to ZWG135 million from ZWG121 million.
Other operating income also decreased to ZWG13 million from ZWG102 million.
However, the group benefited from an income tax credit of ZWG70 million, resulting in a profit of ZWG90 million, a significant turnaround from the loss of ZWG28 million last year.
Unifreight's financial performance indicates efficient cost management, reflected in a high profit margin of 55%. However, the operating expense ratio of 82% suggests significant operating costs, potentially impacting profitability.
On a positive note, the company's debt-to-equity ratio of 0.17 indicates manageable debt levels.
Additionally, Unifreight's current ratio of 1.17 demonstrates its ability to cover short-term debts.
Looking ahead, the company’s focus will remain on expanding cross-border operations and driving revenue growth through increased capacity and enhanced service offerings.
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