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MiX ponders Brazilian options

Nicola Mawson
By Nicola Mawson, Contributor.
Johannesburg, 29 May 2015
MiX Telematics now has 512 000 subscribers across the globe.
MiX Telematics now has 512 000 subscribers across the globe.

MiX Telematics is exiting its partnership in Brazil and, once the paperwork is wrapped up, will look at alternative options for its offering in the country.

Speaking during a conference call on the back of publishing year-end results for the year to March, CEO Stefan Joselowitz said the company had "walked away" from its joint venture in Brazil and is making an "amicable exit".

Joselowitz noted the transaction had been disappointing, and exiting frees the company up to "go it alone" or get a new partner. He said MiX had a dealer network in the country, as well as another small partnership.

In June last year, MiX granted investment holding company Edge Gestao Empresarial a 5% holding in the equity interests of MiX Brazil. The Brazilian operation, which made an expected operating loss as it is still in start-up phase, grew its subscriber base 48.8% and revenue 93.7% during the year.

In the last quarter of the year, MiX hit just over 500 000 subscribers.

Solid year

Joselowitz noted the company closed out the year with "solid revenue growth, strong profitability and excellent cash flow". MiX turned over R1.4 billion during the year, a 9.3% gain, while subscription revenue gained 16.9% to R853.7 million.

The group says the gain in subscription revenue was mostly driven by the addition of more than 61 800 subscribers during the year.

Joselowitz noted the company experienced double-digit growth in all regions except Europe, and generated cash of R228 million from operations, and also invested R129 million in its operations.

"We were delighted to break through the half-million subscribers level, as few telematics solutions providers have achieved this type of critical mass. We are winning important new business, as well as signing meaningful expansions with key customers," added Joselowitz.

During the year, MiX adjusted its overhead cost structures, reaping savings of R5 million, which is expected to grow to R25 million in the current year, said Joselowitz.

Its operating profit dropped from R171.5 million to R149.9 million, while its operating margin declined from 13.5% to 10.8%. MiX notes it is executing its strategy of investing in sales and marketing, which led to increased costs in these areas.

MiX adds the restructuring plans implemented in the Middle East and Australasia segments in the third quarter of the year, together with other cost reduction initiatives, have already contributed towards an improvement in the operating margin. "The company expects further cost savings and resultant operating margin improvement when the cost savings from the Africa restructuring activities, implemented in the third quarter of fiscal year 2015, take effect in the 2016 fiscal year."

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