Despite the challenging operating environment and the negative impact of COVID-19, Redstar Express Plc has increased its investment in new assets indicating foresight and confidence in the economy, writes Goddy Egene
The year 2020 was a very challenging one as a result of the COVID pandemic that impacted businesses and individuals. As financial results of listed companies are being released, the impact of the pandemic is becoming more manifest. It has been a mixed grill as some companies record declines in their profitability, some losses and other profits.
Another major impact of the pandemic was a reduction in investment by most companies given the uncertainties that prevailed in the year. But few discerning companies, which have good foresight and saw opportunities in the challenges thrown up by the pandemic, made significant investments in their assets.
One of such companies, is Red Star Express (RSE) Plc that increased its investment and generally grew its assets to N7.192 billion as at the nine months ended December 31, 2020. This is an increase of 29 per cent compared with N5.587 billion as at December 31, 2019.
RSE provides a portfolio of full logistic solutions in Nigeria, which includes, but not limited to international and domestic express delivery, freight forwarding, integrated logistics solutions, information and document management solutions, warehousing, packaging services, food delivery, agriculture logistics and e-commerce solutions.
The unaudited results of the RSE showed that instead of being discouraged by the negative impact of the pandemic, it improved its assets in order to explore all possible opportunities in the market and retain its leadership position in the courier industry.
Details of the financials indicated that RSE recorded a turnover of N6.595 billion in 2020, compared with N7.841 billion. Cost of sales was reduced from N5.9 billion to N5.235 billion, while total operating expenses fell from N1.374 billion to N1.350 billion. Similarly, financing cost declined from N35.297 million to N32.435 million.
And at a time when most companies were declaring huge losses, RSE ended the nine months with a modest profit of N40 million, compared to the previous year’s figure of N498 million. Demonstrating shareholders and investor confidence in the company, RSE shareholder funds rose from N2.9 billion in December 2019 to over N4.0 billion in 2020. The share capital also increased from N294 million to N463 million, while the company’s share premium jumped by over 400 per cent from N296 million to N1.4 billion in December 2020.
The investment in assets was skewed heavily in favour of in automobiles such as bikes, shuttle vans, trucks and trailers among others.
Speaking, the Group Managing Director of RSE, Dr Sola Obabori attributed the company’s long term success to its futuristic approach, strategic planning, agile management style and bold investments in the future.
Obabori pointed out while most companies were in survival mode in the COVID-19 induced economic meltdown, RSE weathered the storm and had no erosion of capital.
“We also did not lay off any staff, showing our non-negotiable belief that our manpower remain our priceless resource,” he said, explaining that the fundamentals of business are solid asset base, growing market share and the ability to generate revenues on a consistent basis.
“Our increased net assets have given us the means to invest in the future so we can continue to make money. We have been indeed been very bullish in investing in assets and game-changing technology,” he said.
According to him, in addition to acquiring state-of-the-art delivery trucks and operational vehicles, RSE also made investments to improve its technological architecture as well as enhance tracking/visibility, automation and package security.
“RSE has also made a substantial investment in an industry-first cold chain warehousing facility at the international airport. When shipping temperature controlled items, they can be stored there. It will also be absolutely essential in supporting the government in the storage and distribution of vaccines, as the need is already here. RSE has actually shown an unparalleled level of resilience, as we have already bounced back to profitability,” he said.
The GMD explained that one of the best things the y did in the last 2019/2020 financial year was the raising of fresh capital.
“We had a rights issue which was to help us to raise additional capital to augment our working capital. We raised 102 per cent of target, reflecting investors’ confidence in the long term growth of the company. I am glad that we did, as COVID 19 would have made it impossible this year.We have massively invested in new trucks and motorcycles as well as other essential assets. We have retooled successfully and we are well prepared for the next rainy season. We are also perfectly positioned to respond to the opportunities that will come post-Covid-19,” Obabori said.
He said the company is equally going into the agricultural sector in big way, disclosing that RSE is trying to do co-chain trucks that would move fresh produce from the farm for people to the shop floor for retail stores that are all over the country.
“So, even if you run a poultry shop, for example, and you are producing your poultry products, we can support your company by bringing co-chain trucks there to help you move these items from wherever they are produced to the shop floor where they can be sold on a retail basis,” he said.
Obabori said that RSE is also adding value to the pharmaceutical industry and entire health value chain, explaining that the pharmaceutical industry is booming presently because more and more people are taking care of themselves from home with help from neighbourhood pharmacy stores.
“So there is a lot of movement of medicines and pharmaceutical products across the country. RSE now has all the assets required to keep this going. Not forgetting the e-commerce sector, which is probably the most important driver of growth in the new dispensation. RSE is the backbone of this industry. All the e-commerce players are largely dependent on us in many ways. We supply them with motorcycles in hundreds to help them move customers’ products from one place to another and keep the country’s daily economic engine running. So as far as positioning the company for the future is concerned, I think we have done quite a bit. We believe in the Drucker truism that the best way to predict the future is by creating it,” he said.
Obabori had last year assured that in line with its people-service-profit (PSP) philosophy, RSE had remained focused on maintaining its leadership position in Nigeria and in building capacity for the African market.
This, he said, was being done by hiring skilled workforce who were trained and re-trained in order to continually deliver superior financial performance and wider social impact.
“In addition, we are committed to strengthening our first-to-last-mile capabilities by expanding our investments in distribution centres and vehicular assets across the country of Nigeria and in our branches within West Africa that will support new business units focused on e-commerce, agro cold chain distribution and partnership with airlines for Cargo consolidation operations, among others. These have no doubt helped to further diversify the revenue profile of our company in the concluded year and will remain strong growth platforms for the future,” he said.
Tapping in to the changing consumer behaviour following the impact of the COIVD-19 pandemic, RSE, last year, commenced delivery of fresh groceries for its customers in major cities across Nigeria.
Customers were able to send and receive fresh organic products ranging from fresh vegetables/crops to frozen foods (chicken, beef).
“We are mindful of how customers’ shopping habits have changed since the pandemic became widespread. Nowadays, most customers are purchasing products online and having these products delivered to them in their homes. To avoid the risks involved in staying in crowded places, less people will be going to the markets to buy food stuffs for their homes. The need to have these items brought to their homes has become vital; making it a challenge that we are looking to provide a solution for with this new service,” Obabori had said.