Karooooo’s mixed results

Karooooo’s Q3 2023 results were mixed, with strong revenue growth but disappointing earnings growth.

Karooooo generated R930 million in revenue for the quarter, which translated into a 29% year-on-year improvement.

The strong growth continues the trend over the last two years and bodes well for the company’s prospects.

The strong revenue growth did not translate into higher earnings. In fact, Karooooo’s earnings for the quarter were disappointing.

The company reported a net income of R145.6 million for the quarter – a slight decrease from the previous comparable period’s R146.2 million net income.

It is a significant result as the previous five quarters did not experience a net income growth of less than 28%.

The reasons for the lower net income figure can be seen in three segments of the company’s income statement.

  1. It had a lower gross profit margin compared to the previous period. Karooooo paid a higher cost of sales per unit than the previous period, putting strain on its gross margin.
  2. It had higher proportional operating expenses – the ongoing expenses of running the business – which led to a lower operating profit margin and profit before tax than the previous period.
  3. Karooooo paid a much higher effective tax rate on its profit before tax of 32% compared to the previous periods’ 27%, which ultimately pulled through to the net profit margin.

Despite the lower profit margins, Karooooo has delivered promising operational performance.

Cartrack subscribers increased by 14.2% to 1.68 million, continuing strong momentum in its core operations.

It also expanded its presence in Southeast Asia and believed its largest growth would come from this region.

Karooooo said there is great potential in this region and increased its subscriber base in the area by 27% from the prior period.

It also recorded 14% revenue growth in Europe, underpinned by a 13% increase in subscriber numbers.

Karooooo’s latest results confirmed its ability to rapidly grow the company and expand into new regions. The main challenge is containing costs during this growth phase.


This article was first published by Daily Investor and is republished with permisison.

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Karooooo’s mixed results