Low stock, industry changes hit OneLogix

Original equipment manufacturers (OEMs) appear to have changed their vehicle stockholding model, says JSE-listed specialist logistic group, OneLogix.

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Among other things, OneLogix is involved in the storage and transport of vehicles and trucks. OneLogix CEO, Ian Lourens, said OEMs are currently holding far less stock.

“We do the clearing and forwarding of Jaguar Land Rover, for example, and the company’s stockholding is 10% of what it used to be. They bring in stock on a sort of ‘just-in-time’ basis and a lot of stock is being pushed through on a consignment basis to the dealers,” he said.

Lourens attributed this phenomenon to a combination of the global semiconductor shortage and changed consumer vehicle demand patterns because of the impact of the COVID-19 pandemic lockdowns.

He said it appeared that purchasers of the well-known prestigious vehicle brands, such as BMW and Mercedes-Benz, were prepared to wait for the exact colour and specification of vehicle that they wanted while this was not as prevalent among consumers of cheaper vehicle brands.

“The impact of COVID-19 should not be underestimated, and the consequences of emergency actions taken by OneLogix in response to the pandemic were substantial,” he said.

Lourens said the impact of the pandemic included the knock-on effect of international component shortages in vehicle and truck production, with this affecting OneLogix TruckLogix and OneLogix VDS (Vehicle Delivery Service) in particular.

He said the reduction by OEMs to more conservative stock holdings resulted in a year-on-year reduction of OneLogix’s storage revenue of about R36 million, most of which was experienced in the second half of the financial year.

Lourens said this was compounded by the mid-year release of the group’s additional vehicle storage facilities in KwaZulu-Natal following the completion of the sale and leaseback of the third phase of the Umlaas Road logistics hub for R310 million.

He said this contributed to additional costs of R27 million in the last five months of OneLogix’s financial year to end-May 2021.

Lourens said the group also incurred one-off retrenchment costs of R9.5 million during the year, predominantly in the OneLogix VDS business within the Abnormal Logistics segment. He said OneLogix now has surplus space at the Umlaas Road facility but was looking at other avenues to use this space.

“For example, we have just bought an agricultural equipment logistics company, and we are storing a lot of tractors, combine harvesters and ploughs and all that sort of stuff.

“The truck market is recovering so we have a lot of storage for trucks but we have extensive plans to utilise that space for other purposes,” he said.

Lourens said the truck delivery business “took a big hit” in the year, going from being very profitable to a loss simply because of the stock shortage.

“It was not a function of us doing something strategically wrong or that we were not well placed in the market.

“It was totally out of our hands, but we are already seeing that that situation is starting to normalise and obviously at VDS as well,” he said.

Lourens admitted that the next two years were going to be tough for OneLogix but there were 13 businesses in the group that were well-placed for an upturn in the market.

OneLogix this week reported a 6% decline in revenue to R2.46 billion in the year to end-May, with headline earnings per share slumping by 35% to 11.1 cents per share.

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