Cartrack shows strong subscriber growth, battles weak rand, African market

JSE-listed fleet management, insurance telematics and stolen vehicle recovery service provider Cartrack, has grown its subscriber base by 19%, to more than 600 000 subscribers over five continents, in the financial year ended February 28, compared with the previous financial year, says CEO Zak Calisto.

“We have managed to continue the momentum of the last ten years.”

Asia Pacific and Europe contributed strongly to the company’s expansion, with 225% and 26% subscriber growth, respectively, off a low base.

The South African subscriber base grew by 17%.

However, in the rest of Africa, the subscriber base decreased by 2%.

South Africa has, by far, the largest subscriber base within Cartrack, at around 450 000 subscribers.

Speaking in Johannesburg at the announcement of the company’s financial results, Calisto noted that he believed the group was now one of the ten largest telematics companies in the world.

However, he said the company was, for the time being, not seeking to expand its geographical presence any further.

“We have enough diversity, and enough to work on before opening up in more new countries. We are aware of the cost of losing focus.”

Cartrack has a presence in 24 countries.

Calisto added that the company would have a strong focus on research and development going forward, as it worked to improve its product offering.

“We are only at 10% of where we should be. We’ll invest a lot in research and development in the next five years to become a significant player in the market in the long term.

“Current and future customers require ever-increasing information about their assets and people to more effectively achieve their goals.

“Our ambition is to become a more integral part of their lives, and shift from a service provider relationship to becoming business partners.”

Calisto said the past financial year delivered two challenges, namely the weak rand, as well as a weak African market outside of South Africa.

Currency fluctuations had a R27-million negative impact on Cartrack’s 2017 operating profit.

Political and economic instability in the African market outside South Africa saw revenue in this market drop by 22%, to R109-million. Earnings before interest, taxes, depreciation and amortisation declined by 29%, to R42.2-million.

A number of businesses in this region faced liquidation, while individuals were “under enormous financial stress”, said Calisto.

He believed the African market could show an uptick this year.

Overall, Cartrack increased revenue by 13% for the year ended February 28, to R1.1-billion.

Operating profit increased from R344.8-million, to R368.8-million.

Looking ahead, Calisto noted that the global telematics industry was showing signs of further consolidation.

Opportunities that might arise to provide “economies of scale”, as well as improved subscriber value, would be considered on their merits, he said.