Lonrho to take low-cost airlines to WAfrica
Category Hospitality Property News
AFRICAN-focused investment company Lonrho plans to roll out 12 budget hotels, known as easyHotels, in five SA cities within the next three years and hopes to operate its low- cost airlines in six West African countries by the end of this year.
Johannesburg- and London- listed Lonhro, which issued a quarterly trading update yesterday, on Tuesday announced plans to open a budget hotel in the Johannesburg central business district this year.
"We are looking at about 12 easyHotels within SA and 50 within the continent in the next two or three years. The budget range is underserviced and the top end is probably well serviced in SA," Lonhro CEO Geoffrey White said yesterday.
In SA, the company is looking at Port Elizabeth, Bloemfontein, Cape Town, Durban and Johannesburg.
"I would hope the low-cost airlines would be operating in six countries in West Africa by the end of the year," Mr White said.
In the transport sector, Lonrho runs Fly540, a regional low-cost airline. It operates from hubs in Kenya, Angola and Ghana.
Mr White said although the company was expanding its budget hotel and airline footprint, the focus for the group this year would be to grow the agricultural business. He said by the end of this year the agricultural business would account for 65% of the group’s revenue and earnings.
Lonhro operates in the agricultural sector, hotel space, airlines, support services, infrastructure and transport. It has been investing in these businesses to tap into the growth in Africa.
"Africa’s economies are growing very strongly. The big growth in Lonhro this year is going to be agriculture and logistics. We see two drivers in the agricultural business.
One driver is the expansion of the SA-based retailers Shoprite, Spar and Pick n Pay. They are all opening new stores. The second one is the growing appetite for supermarkets around the world to source produce from Africa," Mr White said.
The agricultural business contributes about half to the companies’ earnings. Mr White said Lonhro would not plough more money into the agricultural sector this year as it invested adequately last year.
He said the company spent about $50 million last year in building up capacity for its agri-logistics business. "We spent a lot of money last year in building the platform.
"We have the biggest cold store in the Johannesburg airport and we have the largest capacity to air-freight fresh produce to the world. We are happy with the infrastructure that we have. Now it’s a factor of meeting customer demand."
In its infrastructure business, Mr White said Lonhro had had success in building schools for the South African government.
In support services, he said the company was working on a feasibility study to develop an oil logistics business in Ghana.
Lonhro yesterday announced results for the final quarter and the 15-month period ended December.
For the three months to December, revenue for continuing operations rose 67% to £46,1 million, compared to the same quarter in the prior year.
Net operating profit for the quarter was £0,7 million on continuing operations, compared to a £3 million loss in the same period in the prior year.
Author: Warehouse Finder
