Red Star Invests in Future, Grows Asset Base

Red Star Express, the only indigenous logistics company to be listed on the Nigerian Exchange Limited (NGX) has grown its total assets to almost N8 billion, as the company continues to invest in the future, and set new benchmarks in innovation and technology growth.

In what can be aptly described an apparent resilient performance, the group reported strong revenue and earnings for the last quarter of its business year. Group turnover jumped to over N12.6 billion, and Profit before tax stood at N393 million for the year ended March 31, 2022 from N220.8 million reported in 2021 financial year.

RSE recorded a turnover revenue of N12.6 billion (an impressive lift of 34per cent over the corresponding period of last year) while Net cash provided by operating activities of N740 million against N726 million in the prior year (an improvement of 16 per cent compared to the prior year)

Details of the revenue split include the following; Red Star Courier that grew by 38.8 per cent to N7.38 billion in 2022 from N5.31billion in 2021, while Red Star Freight that grew by 33.5 per cent to N1.7billion in 2022 from N1.28billion reported in 2021.

Other contributing factors to revenue are Red Star Support Services that appreciated by 13per cent to N1.66 billion in 2022 from N1.46 billion in 2021, while Red Star Logistics rose by 37per cent to N1.92billion in 2022 from N1.4 billion in 2021.

It is pertinent to note that global economies have faced very trying times since 2020, following the unfavorable outbreak of the COVID-19 pandemic that practically grounded many businesses in Nigeria and all over the world. Only the most resilient have managed to stay profitable.

Red Star demonstrated a very robust and healthy balance sheet, ending the period, with cash and cash equivalents of N761 million, increased profit before tax margin of three per cent, as against 2.2 per cent in the prior-year period and earnings at 28 kobo per share, a 75per cent increase over the prior year at 16 kobo.

In the period under review, the company invested in operating assets of over N700 million to expand its operations. The results come as the industry continues to grapple with supply chain headwinds and inflationary pressures.

Investment Reflects in Total Assets

Red Star’s commitment to investing in the future was reflected in its non current asset base, which climbed to N3.2 billion, while current assets rose to over N4.5 billion. Total assets thus jumped to a record level of over N7.8 billion in 2022 from N billion reported in 2021.

The prudence of the company’s leadership is also reflected in the revenue reserve now standing at almost N2.6 billion. Shareholders’ funds also rose in the reporting period.

At a time when many companies were spending more on recurring expenditure, Red Star continued to pursue a strategy of investing in technology and assets.

Counting as strength on the company’s side is its strong sense of innovativeness and strategic partnerships. Red Star has efficiently developed strategies that impact not only on its business but essentially on the economy and its prospective customers.

A good example is the ongoing support it provides to small and medium enterprises (SMEs), which it began since 2018 and enhanced over the last three years.  By specially focusing on what it refers to as the ‘lower SMEs’, Red Star has captured the segment of investors that constitute a significant economic power house.

 The outcome is a commendable robust relationship between the company and thousands of SMEs, working with its e-commerce department.

Supports in the non-core sector

Red Star has also continued to support the agricultural sector, targeting farmers and agro entrepreneurs and having its in-house experts offer them free assistance in ensuring that rudimentary processes such as business documentation/certification are in place in other to help them grow their businesses, even to the export levels. These efforts are expected to yield positive company yields in the near future.

The company’s further investments in cold chain trucks (its brand new trucks, plying the roads as   ‘Red Star Cargo – cold chain services), though futuristic is already yielding a positive outcome.  The company’ trucks/cold store storage which on the onset began by essentially transporting perishable farm produce such as tomatoes, recently with the advent of COVID, cashed in to a more strategic function of providing indispensable cold storage facilities to pharmaceuticals and makers of other goods that require strict temperature control.

Red Star has therefore, sufficiently deployed investment in assets to give its business the required momentum.

Utmost importance is paid to deploying huge asset investments to the e-commerce sector which it considers, and aptly so, to be about the most important driver of growth in the new era. There is probably no gainsaying that the RSE has successfully positioned as the industry backbone.

The company’s new Managing Director, Mr. Auwalu Babura however emphasized that Red Star’s key success factor and differentiator is the resilience of its people and the company’s none negotiable commitment to putting people first above all else.

He noted that, “Red Star is driven by its sound philosophy of PSP- People, Service, Profits. We have long realized that when you take care of the people, they will take care of you. In the logistics business, the consequence of error is very high. We believe that if the team is well-fired up, we can continue to deliver extraordinary and best-in-class services.

Resilient turnover, revenue

Describing the company’s latest result as, ‘a resilient turnover revenue and earnings growth,’ the Chief Executive Officer of Red Star Express enthused that: “Given our momentum, we are optimistic about our business, particularly in light of our operational improvements and the business process reengineering. While we acknowledge the challenges of the persistent inflationary cost pressures, with rising energy prices, we believe we are well-positioned to deliver on growth investments with good returns to shareholders.”

According to Babura, Red Star’s enduring success story is indeed attributable to its futuristic approach, strategic planning, agile management style and bold investments in the future. It has continued to withstand the storm with no capital erosion and with very low staff turnover.  “With a human resource vision and culture that views its staff as its greatest asset, heavy investments are usually made on human capital development.”

The Head of Finance, Mr. Valentine Onyibo echoed that,  “despite the rising cost due to inflation and other negative business indices, Red Star has maintained improved margins and further enhanced its financial position. The portfolio continued to perform well and we recorded several positive earnings across the company and its subsidiaries.”

Red Star Express Plc is a Licensee of Federal Express (FedEx) Corporation, the world’s largest delivery solutions provider. It has over 150 offices in Nigeria; with international offices in Niger Republic, Burkina Faso and Benin Republic. Its network spans over 1,500 communities in Nigeria and 214 countries worldwide.

Red Star Express is made up of 4 divisions and business units specializing in areas such as Express Delivery, Logistics, Freight, Outsourcing services, Supply Chain Management, E-Commerce Facilitation, Printing and Packaging, E-Archiving, as well as Agro Trade Logistics.

In view of the foregoing, Babura‘s prediction of better years ahead is definitely not farfetched.  “I envision a stronger Red Star – bigger in terms of size, revenues and investment in technology, ”he said.