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Key Points
- Karooooo will write down goodwill for its Mozambique operations after unrest forced the removal of thousands of vehicles and a two-month billing suspension.
- CEO Zak Calisto says the goodwill impairment won’t significantly affect Karooooo’s earnings, as Mozambique contributes a small portion of its overall profits.
- Karooooo reported R3.35 billion ($182 million) in revenue, but shares fell nearly 10% this year, lowering its market value to $1.27 billion.
Karooooo Limited, the Singapore-based mobility platform led by South African tech mogul Zak Calisto, is preparing to record a goodwill impairment for its Mozambique operations in the fiscal year ending February 2025.
The company was forced to remove several thousand vehicles from its platform after they were burned and suspended billing in Mozambique for two months starting mid-November due to escalating political unrest.
The country has been in turmoil since its disputed Oct. 9 elections, with months of tension leading to violent clashes. The Decide Platform, a local group tracking the violence, estimates that more than 350 people have died. Although protests against President Daniel Chapo, who was declared the winner, have subsided in recent weeks, sporadic unrest continues.
The instability has taken a toll on Mozambique’s economy, costing the country an estimated 3 percent of its GDP. Several businesses have also been affected, including logistics giant Grindrod, aluminum producer South32, and graphite miner Syrah Resources, which supplies Tesla and recently declared force majeure.
Karooooo CEO: Mozambique setback won’t hurt profits
Zak Calisto, Karooooo’s founder and chief executive, acknowledged the toll on the company’s operations in an interview. “There’s been a serious impact on our business and our customers’ businesses in Mozambique. We’ve had to take a few thousand vehicles off our platform because they were burned down. Warehouses aren’t operating, and factories aren’t working.”
To support affected customers, Karooooo halted billing in the country for two months. Despite this, Calisto does not expect the goodwill impairment to significantly affect the company’s overall earnings or cash flow, noting that Mozambique represents only a small portion of its profits across 25 countries.
“We’ll take a prudent approach to the goodwill impairment in line with international accounting standards,” he said. “But is the business still valuable? Absolutely. It’s generating strong free cash flow, remains profitable, and is still an important part of our operations.” Mozambique is strategically significant for Karooooo, particularly in supporting South African customers with cross-border businesses.
Karooooo reports revenue growth, shares decline
Founded by Calisto in 2001 as a South African vehicle recovery service, Karooooo has grown into a global mobility SaaS provider with over 2.2 million users across 25 countries. Its Cartrack unit provides real-time analytics to help companies manage fleets and operations.
For the nine months ended Nov. 30, 2024, Karooooo reported a 15 percent increase in revenue to R3.35 billion ($182 million), up from R3.11 billion ($169 million), driven by a 15 percent rise in subscription revenue to R2.98 billion ($162 million). Gross profit rose 18 percent to R2.33 billion ($127 million) from R1.97 billion ($107 million) a year earlier.
Despite its strong financial performance, Karooooo’s shares are down nearly 10 percent this year on the Nasdaq Stock Exchange, bringing its market capitalization down from $1.41 billion to $1.27 billion at the time of this report.
