Bolloré Africa Logistics CI: Transport

The Company

Bolloré Africa Logistics CI is one of the major players in the transport, handling and logistics sector, offering air, road, sea and rail transportation services. In April 2009 the group management decided to change the company’s name from SDV-SAGA to Bolloré Africa Logistics Côte d’Ivoire, which helped standardise the name of the group and consolidate its presence on the continent.

With a presence in Côte d’Ivoire for over 50 years, Bolloré currently maintains subsidiaries in Abidjan, San Pédro, Bouaké, Noé, Ferkéssédougou and Ouagadougou, with total warehouse and storage areas in excess of 1.4m sq metres. The company also has a 15-year concession for the container terminal at the port of Abidjan, which was awarded in 2004.

Port activities resumed after the end of the post-election crisis, with a 1.58% year-on-year (y-o-y) increase in revenues to CFA75.35bn (€113m) in 2013. This followed exceptional growth in 2012 of 32% due to the rebound effect. Net profit stood at CFA9.82bn (€14.7m) in 2013 compared to CFA8.21bn (€12.3m) in 2012 thanks to revenue growth as well as higher financial income, which came to CFA5.27bn (€7.9m), up from CFA3.19bn (€4.8m) in 2012.

The year 2014 started off relatively gloomily, with half-year revenues dropping by around 8% y-o-y to CFA38.07bn (€57.1m). Activity has primarily been affected by events that have generated additional costs and a drop in productivity, such as delays caused by the replacement of the company in charge of the control of goods value in customs; the dysfunction of the Customs declaration process due to the SYDAM (automated Customs clearance system) update; and congestion in the port access area. As a result, half-year net profit fell by 38% to CFA5.90bn. However, the cost controls initiated by management should ensure positive net profits are realised for the year.

Outlook

Bolloré should continue to benefit from a peaceful environment and the expected economic growth of around 8% for 2015. Future projects include new ship housing areas and the construction of a second container terminal in deep water, which will allow the port to receive vessels carrying up to 8000 twenty-foot equivalent units.

Furthermore, the establishment of a major industrial and commercial area – covering 500 ha – and the promotion of the two ports of the country ( Abidjan and San Pédro) for hinterland markets should also help expand the flow of traffic.

The logistics sector is highly competitive, and Bolloré is strongly challenged in the maritime transit, handling and air transit segments by DELMAS, the GETMA, Movis and the SIMAT. The competition is very aggressive, especially when it comes to pricing. Nonetheless, Bolloré should maintain its leadership position thanks to the growing hegemony of its parent company, Bolloré Group, in the port of Abidjan. Having already secured the concession for the first container terminal, the group has also won the concession for the construction of the second container terminal. Bolloré should take full advantage of this to leverage its maritime and handling activities.

With a price-to-earnings ratio of 19.39x, the stock trades above the sector average of 16.59x – showing that the stock is highly valued. This price level is explained by the fact that the market has already taken into account the expected growth from the concession of the second container terminal, which should not be ready before 2018.

Development Strategy

The management strategy of Bolloré is to maintain its market share across all of its lines of business in spite of growing competition, in addition to supporting growth by developing new markets – particularly those focused on fast-moving consumer goods. The company also plans to strengthen and expand its presence in mining and oil, as well as revive and expand its conventional handling activities in the port of San Pédro. To achieve these objectives, Bolloré’s management decided to invest CFA6.86bn (€10.29m) in 2014.