Bollore edges forward but is yet to make transformative acquisition

Bolloré Logistics

Once again the French business Patron Vincent Bollore is in the news, this time with an attempt to tighten his grip on the French television company Vivendi. As usual, it is the media businesses that attracts excitement, but Bollore’s core company is Bollore Group and its major business is Bollore Transport and Logistics.

This newly re-organised company is looking to break-out of its traditional niche, characterised by a leading presence in Africa, to enter the first rank of global logistics service providers. It believes it can do this in part by major acquisitions in North America. Yet the company is not doing too badly with its existing business model.

Numbers just published show that Bollore Transport & Logistics has had a slightly bumpy ride over the first quarter of this year with a fall in underlying revenue of 5% year-on-year. This is hardly surprising as the company’s important African markets have been hit by the fall in the price of oil and other commodities.  Bollore state that the weaker African markets have been counter-balanced by its forwarding and warehousing business in North America, Asia and Europe. However, it should be noted that Bollore has excellent margins for the sector, with its 2015 year-end numbers showing income as a proportion of sales at 7.3% which edged up over the 12 months despite the difficulties in the African economies.

One of the big differences between Bollore Transport & Logistics and most of its big rivals in forwarding and contract logistics is the French company’s interest in operating big capital assets such as railways and ports. These are largely in Africa and are legacies of Bollore’s unique position on the continent. However, it is beginning to diversify into new locations with, for example, the first quarter results seeing a confirmation that Bollore Transport & Logistics has won the concession for the building of a container terminal complex at Dili Port in East Timor. This is a mid-sized port development that interfaces with oil and gas operations in the Timor Sea and is typical of the sort of project that Bollore is successful with in Africa.

The question that Bollore faces in the immediate future is how to diversify without diluting margins. Forwarding and related contract logistics in North America is a tough market at present and margins of over 7% would be on the optimistic side. Possibly it is through expansion into ‘frontier’ markets such as East Timor that Bollore can sustain its differentiation.

Source: Transport Intelligence, 18th May 2016

Author: Thomas Cullen