As financial results of listed companies are being released, the impact if the COVID-19 pandemic on Nigeria’s economy in 2020 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.
In spite of the challenging operating environment and the negative impact of the pandemic, Redstar Express Plc has increased its investment in new assets, indicating that the company has foresight and confidence in the economy.
Star Express (RSE) Plc 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.
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 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.
According to the GMD, RSE did not lay off any staff because of the non-negotiable belief that manpower remains the company’s priceless resource. He explained 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.
In addition to acquiring state-of-the-art delivery trucks and operational vehicles, the GMD stated that 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.
Obabori explained that one of the best things they 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,” he said.
He also mentioned that the company is equally going into the agricultural sector in a 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.
Obabori disclosed 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.
The GMD 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.
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).