Knutsford Express spends over J$50m on new US service
Published:Wednesday | August 28, 2019 | 12:36 AMSteven Jackson/Business Reporter
Knutsford Express Limited, which provides cross-country bus services, has invested about US$400,000 (J$55 million) to acquire its overseas bus-hireage service, KE Connect US.
The company chose to invest a manageable amount in the business rather than sink loads of cash into the United States (US) market.
“We are not breaking the bank,” said founder and CEO Oliver Townsend in a Financial Gleaner interview on Tuesday.
Part of that steady investment sees the company continuing to earn higher profits despite the capital spend. Earnings per share totalled $0.038 for the full year ending May 2019, or two cents more than a year ago.
“This US project is a long-term project. It is coming on slow, but by the second year, it should be carrying its own weight. We view it as a long-term play,” he said about the operations.
The company, which operates in Florida, USA offers shuttling services to groups and events, he said.
The business segment holds assets of $66 million of the group’s total assets of $1 billion as at May 2019. The company raised funds through a $150-million bond to assist in making the acquisition.
STRONG YEAR
Townsend described the financial year as very strong at its core, with revenue and total assets both surpassing the $1-billion mark for the first time.
“So it was a milestone year,” he said.
The US operations made revenue of $21 million, or 0.02 per cent of total sales for the group, as at May 2019. Expenses at some $46 million led the company to post a $25.4-million net loss in the US. The profitability of the Jamaica operations at $214 million, however, led the group to post net profit of $188.5 million after tax, up from $178 million a year earlier.
The group acquired 12 new buses in its financial year, taking the tally to over 30. Four buses joined the US fleet putatively to replace existing fleet, while it acquired eight new buses in Jamaica. Part of the fleet investment includes the company buying its first double-decker coach for express-service between Kingston and Montego Bay.
“The fleet additions were US$300,000. The vast majority revolved around a strong fleet upgrade and additions for the core company to better respond to customer demand and enhance customer delivery,” stated Townsend.
The company also plans to move its Ocho Rios, St Ann depot to Drax Hall in St Ann at the exit of the North-South Highway. This will save time and add new food and shopping options for travellers. Knutsford awaits planning approval prior to starting construction.
“We hope to get approvals soon,” Townsend said.
Earlier this year, investors started Jam Air, a cross-country airline. Townsend said that it offers travellers an alternative to ground transportation but that he continues to serve his market while offering improvements.
“It is a good addition to the transport landscape. Nothing wrong with that, so people have an option. We look at our neck of the woods and keep seeing how we can deliver better service to our customers,” he said.