- November 25, 2022
- Posted by: Cheryl
- Category: Transport
Frontier’s share price held steady on Thursday, suggesting the market regarded the results as acceptable under the difficult circumstances.
Frontier Transport Holdings, which has Cape Town-based Golden Arrow Bus Services as its main profit engine, endured a torrid six months to end-September — having to steer around steep fuel cost increases and damaging protests.
But the Hosken Consolidated Investments (HCI)-controlled group’s bottom-line profit only slowed 6% to R105m, with the interim dividend hiked 10% to 22c a share.
Frontier’s share price held steady at 500c on Thursday, suggesting the market regarded the results as acceptable under the difficult circumstances.
“A steady upward trajectory from a passenger base that was decimated by Covid-19 lockdown restrictions during the previous review period, was the lodestar of a resilient group performance severely impacted by uncontrollable operational expenses which affected the road passenger transport sector in general…,” CEO Francois Meyer said.
Meyer said the group managed to increase revenue 15.2% to R1.17bn — but this was offset by a R128m increase in fuel costs and above-inflation price increases for parts, pushing up operating expenses 22.9%.
Meyer also bemoaned Golden Arrow having to contend with violent backlash in the aftermath of law-enforcement crackdowns on rogue taxi operators. That, he said, resulted in the burning of five buses in the interim period.
Aside from the steep fuel price increase and fleet damage, Meyer said that Frontier was also hampered by the failure of the Treasury to increase the contracted rate for the year to Golden Arrow. Large bus companies that ferry passengers to and from work receive annual government subsidies to shore up operations.
Looking ahead, Meyer said Frontier had obtained favourable results from stringent testing of two electric buses under service conditions, and the board had approved the purchase of an electric bus unit. “The outcome of the performance of the customised unit will be the precursor to the full recapitalisation of the Golden Arrow fleet with electrically powered buses.”
He said recently acquired Frontier Tyres and Alpine Truck & Bus had been bedded down, and a “sound basis has been laid for these entities to derive the full benefit of the group’s operational finesse in the road passenger transport sector”.
Other subsidiaries also showed stout performances.
Meyer said Sibanye Bus Services had entrenched itself as the preferred public transport option along the West Coast corridor in Cape Town, and posted creditable results with passenger levels exceeding that of the pre-Covid-19 period.
The Table Bay Area Rapid Transit, which operates MyCiTi services, delivered a solid performance, while N2 Express service was resuscitated as a joint venture with two taxi associations from Khayelitsha and Mitchells Plain.
Meyer said Frontier’s niche subsidiaries, ElJosa and Shuttle Up, took full advantage of the post Covid-19 resurgence in the luxury travel and tourism sectors, with both entities boosting revenues.