Loding Loading ...
X
لا تقدم سنشري للاستشارات والتحليل المالي ش.ذ.م.م (سنشري) خدمات استشارية استثمارية أو خدمات إدارة المحافظ ولا تضمن العوائد الاستثمارية. كما أننا لا نقبل ولا ندفع بعملة مشفرة أو عملة رقمية. موقعنا الإلكتروني الرسمي هو www.century.ae. احذر من الشركات المحتالة أو المواقع الإلكترونية التي تتظاهر بأنها شركة سنشري. لسنا مسؤولين عن أي خسائر تنجم عن استخدام مواقع إلكترونية أو كيانات مزيفة. ينطوي التداول في الأسواق المالية على مخاطر خسارة كبيرة قد تفوق الودائع وربما لا يناسب جميع المستثمرين. قبل أن تبدأ، يُرجى التأكد من فهمك التام للمخاطر ذات الصلة.
logo

Wednesday, February 23, 2022

Does GXO plan more acquisitions after its £1.3bn Clipper bid?

تم إعداد هذا المنشور من قبل سنشري للاستشارات

Does GXO plan more acquisitions after its...
Does GXO plan more acquisitions after its £1.3bn Clipper bid?

A strong balance sheet and a customer base of global brands make GXO Logistics well placed to invest in organic growth and explore new acquisitions, Neil Shelton said, days before announcing the £1.3bn deal to buy Clipper Logistics.

On the back of “phenomenal” fourth-quarter results, GXO Logistics [GXO] could be looking to strengthen its position through further bolt-on acquisitions, Neil Shelton, chief of strategy, told Opto.

The company, which announced on Monday it plans to buy UK-based Clipper Logistics [CLG.L] for £1.3bn in a cash and share takeover deal, is set for a “strong performance beyond 2022”, Shelton said. The deal, which has now been agreed, values Clipper at £943m, the Financial Times reported.

GXO already works with brands such as Apple [AAPL], Nike [NKE], Nestlé [NESN] and Whirlpool [WHR], as well as other leading companies in a range of sectors including healthcare, construction, agribusiness and automotive. The new deal will potentially add Clipper’s customers, which include UK retail giants John Lewis [JLH.L], Asda and Marks & Spencer [MKS.L], to its growing client base.

“This potential acquisition would enhance GXO’s position as a successful pure-play logistics leader,” CEO Malcolm Wilson said in a statement. “We believe we can achieve very significant productivity opportunities by taking advantage of technology and infrastructure overlap in the joint enterprise.”

Record Q4 sets the stage for more growth

GXO had a “fantastic quarter” with record-breaking results. Q4 revenue totalled $2.3bn, up 28%, bringing full-year revenue to $7.9bn. As Shelton explained, organic growth increased by 19%, “the strongest quarterly growth that we printed last year up against our toughest year-on-year comp”.

“Importantly, the wins that we’ve announced and the strength of our sales pipeline, which is at absolute record levels exiting 2021, really highlights that GXO is on an amazing trajectory for 2022 and beyond”.

Shelton highlighted that GXO is seeking to strengthen its ties with existing customers, and also win over new ones. “Our top 20 customers now are working with us in three countries, and 80% of them gave us a new facility over the past 12 months,” he said, adding that this is a “fantastic land-and-expand opportunity” given that “so many of these big customers are global blue-chip brands.”

Crucially, Shelton points out that GXO managed to eat into its rivals’ market share as well. “We took just over 30% of our growth coming through from our competitors,” he said.

$536-546MILLION TELADOC'S EXPECTED REVENUES FOR Q4

Acquisitions lined up

With its share of the logistics market already growing, GXO could further strengthen its position through further bolt-on acquisitions, particularly as it has a significant amount of cash on balance.

“We’ve got great optionality to look at bolt-ons and clearly there’s been a lot of M&A around the logistics space, which highlights the attractive nature of that industry, and the multiples being paid have been rising over a period of time,” Shelton said.

Though he pointed out that the company will also be “investing in our own business for organic growth”, Shelton explained that “we will have the option of considering bolt-ons […] to enhance the geographic position, to drive new vertical expertise.”

He cited the acquisition of the majority of Kuehne + Nagel’s [KNIN] UK contracts, which closed in January last year, as a key example, as well as deals with Currys [CURY] and BT [BT]. “[It] really gives us a fantastic position in UK technology,” Shelton said.

“It will be those sorts of bolt-on acquisitions that we may consider. They’ve got to enhance our growth opportunities, they’ve got to be accretive to GXO’s shareholders and, yes, we can consider opportunities in the future, given the strength of the balance sheet that we currently have.”

“I imagine we’re always kind of looking around our industry. It’s a fantastically fragmented industry,” Shelton continued. “We just want to ensure that when we are considering any bolt-on that it drives value for our shareholders.”

$536-546MILLION TELADOC'S EXPECTED REVENUES FOR Q4

Tech helps GXO stay ahead of the competition

As the company continues to expand and innovate, Shelton explains that “automation is helping us, and technology is helping us to take share from some of our smaller rivals”.

He hopes that innovations in technology will help to win over more potential clients: “Where we’re focused is driving predictability for our customers using technology as a strategic solution to their problems. And we’re seeing from the strength of our sales pipeline that there is no shortage of opportunity from existing and indeed potential customers wanting to use this as an opportunity to fix an important part of their supply chain.”

Shelton also points out that the company has the edge over its rivals in terms of technology adoption. “If you look at the technology side, the industry is very under-automated — about 5% automated. We’re at six times that level, and we will continue to remain ahead of the field. Today we are in the field piloting around 200 pieces of new technology from about 100 different suppliers.”

With this in mind, he hopes that GXO can continue to stand out from the rest of the crowd in the logistics space. “I don’t think there’s anybody who is able to test, pilot and deploy technology the same way that we are,” he said. “Having that predictability is really helping us to set us apart.”

Source: This content has been produced by Opto trading intelligence for Century Financial and was originally published on hwww.cmcmarkets.com/en/opto/does-gxo-plan-more-acquisitions-after-its-13bn-clipper-bid.

Disclaimer: Past performance is not a reliable indicator of future results.

The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Century Financial or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

Century Financial does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and Century Financial shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.