OneLogix is getting noticed on the Johannesburg Stock Exchange as it grows its portfolio of established, asset-rich niche businesses. There is just one qualification for membership, CEO Ian Lourens told John OÔÇÖHanlonÔÇöan entrepreneurial spirit that is still alive and well.
From the word go, thereÔÇÖs a lot of counter-intuitive things going on at OneLogix. For a start, it was surprising to find the CEO sitting in an office at the premises of one of the group companies, rather than at the corporate office just round the corner at Kempton Park to the north-west of Johannesburg. But Ian Lourens, a former senior executive of big brands like Hoechst and Beecham, ex-mayor of Midrand and past chairman of the Franchise Association of Southern Africa, has several pieds ├á terre around the country, because he likes to be close to the action.
OneLogix goes back to 2000 when, as one of a group of business partners, Lourens acquired a shell company on the JSE and proceeded to acquire transport companiesÔÇöeleven of them in allÔÇöwith the objective of becoming a major broad based player in the logistics industry. That venture traded ÔÇ£relatively unsuccessfullyÔÇØ, he admits ruefully, but lessons were learnt that quickly led to its downscaling in 2003 and the transfer of OneLogix in May 2004 to the newly instituted AltX. The new group has a very different approach. Rather than competing with the larger established players, it aims to be a niche player in various markets. ÔÇ£One approach is to look for small margins on large volumes of businessÔÇöwe are focused on doing the reverse,ÔÇØ says Lourens. ÔÇ£We like to operate in markets we can reasonably expect to dominate, and in which there are comparatively high barriers to entry.ÔÇØ
They say a quick recovery from a wrong turning is the mark of a true entrepreneur; and the figures show that the direction taken by OneLogix is a sound one. The group continued to make a profit in the year to May 31 2009, and though these were down by some 11 per cent on the previous year, revenues went up by the same amount, from R512.5 million to R568.9 million. Most importantly, Lourens says, the businesses held or improved their market share. Wherever possible, he likes the founding entrepreneur to continue to run the businessÔÇönobody knows it better, or has as much motivation to scale it up.
At first glance, it is tempting to call OneLogix a diverse group. It operates in clusters, Lourens explains: specialised logistics, the distribution of magazines and newspapers, and PostNet, the international franchise Lourens brought to South Africa that was the groupÔÇÖs strongest performer last year.
The hardest-hit sector in the period, not surprisingly, was automotive and that impacted directly on VDS (Vehicle Delivery Services), which delivers cars to dealerships throughout the SADC region using its 210 trucks and trailers. With offices in Harare and Lusaka as well as a network of bases in South Africa, it has contracts to deliver the vast majority of marques, and has gained market share because of its quality. ÔÇ£The main competitive advantage of VDS is the online track-and-trace capability we have and none of our competitors can offer. This has allowed us to gain market share over the last five years. Just as important, it has softened the blow of the recession: the private vehicle market in South Africa fell by up to 35 per cent, whereas our profit was down just 10 per cent.ÔÇØ With about 30 per cent of the market in South Africa itself and 90 per cent of cross-border car deliveries, VDS is doing well and operating on good margins, he says, made possible by its IT-backed quality.
Group member CVDS delivers commercial vehicles in convoys using its 80 HGV licensed drivers. Too big to go on trailers, these are shipped by manufacturers including Volvo or Mercedes-Benz into ports such as Port Elizabeth where CVDS is based, or locally manufactured for onward delivery to customers throughout the region. In April, OneLogix acquired RFB Logistics, which specialises in trucking abnormal loads like boilers on its fleet of low-loaders.
At first glance, Lourens concedes, PostNet may not seem to fit into the picture. It is a franchised network of 230 outlets all over South Africa, offering essential services to the countryÔÇÖs small and medium businesses. It provides an international courier service, mailbox services, stationery, copying and printing and of course, digital backup. OneLogix holds the master franchise for the American originator, but operates PostNet SA in a highly autonomous way. ÔÇ£It is in our group because roughly 60 per cent of its revenue is generated by courier services that compete, in a sense, with the SA Post OfficeÔÇöeffectively, it is the retail arm of DHL in Southern Africa, though within this country we operate our own network PostNet Courier, with a fleet of 300 vehicles.ÔÇØ
The third grouping within OneLogix is its ÔÇÿmedia clusterÔÇÖ. This contains three businesses, starting with Media Express, which collects newspapers and other bulk printed material from the printers and delivers it right through southern Africa, placing it in the hands of the micro distributors who supply the retail newsagents. ÔÇ£The South African market is not big enough to decentralise printing,ÔÇØ Lourens explains. ÔÇ£Newspapers are centrally printed and then distributed to the main centres of population. We do it all by air transport, flying it out in the evening from Johannesburg, receiving it in Cape Town (as an example) early in the morning, breaking it into consignments for these distributors.ÔÇØ
Another OneLogix business, Press Support, is one of these micro distributors operating mainly in Johannesburg as well as in Cape Town and Durban. It has a fleet of 30 vehicles, though it also depends on and enables a very African form of enterpriseÔÇöfinal delivery is frequently done on bicycles by hundreds of individuals who thereby get employment or supplement their income. ItÔÇÖs good, says Lourens, to be able to find something that helps the group carbon footprint. ÔÇ£They do more than a million kilometres a year, and thatÔÇÖs a lot of diesel fumes saved!ÔÇØ
The portfolio built up under OneLogix is secure behind its entry barriers of assets or knowledge, and united by being major players in defined markets. ÔÇ£We are always on the lookout for acquisitions, as long as they meet our criteria,ÔÇØ says Lourens. ÔÇ£We will probably tend to expand our existing sectors or move into adjacent ones, rather than leap into completely different areas like the food industry for example.ÔÇØ
An excellent BEE rating is a distinct further advantage in the marketplace, as is the group focus on IT infrastructure. ÔÇ£We have spent a lot of time and effort because it becomes a competitive advantage. We have gained on our competitors year by year, and after five years I think we are way ahead!ÔÇØ