Mexico City — Grupo Traxión (TRAXION), a Mexican road haulage and logistics company, could reactivate its merger and acquisitions activity this year as part of its growth strategy, and with which it is seeking to get back on its pre-pandemic road to expansion.
The company has not ruled out acquisitions for its logistics and technology business, but which are light on assets, Antonio Tejeda, the company’s executive vice president for investor relations, told Bloomberg Línea.
“Yes, we are looking at mergers and acquisitions in the logistics business, with a focus on light assets,” he said.
Potential acquisitions would be focused on creating verticals that strengthen the company’s last-mile businesses, distribution and other logistics services that the company already has and that have shown “explosive” growth during the pandemic, he added.
More acquisitions would put the company back on the road to the strategy it has followed over the last 10 years. Traxión, founded in 2011, has built a diverse business portfolio, but it has not made a large-scale acquisition since 2018, with its most recent purchase being Autotransportes El Bisonte.
Since 2019 the company has focused on creating synergies and cutting costs.
Pre-Pandemic Growth Levels
Traxión hopes to recover its pre-pandemic growth levels in 2022, despite the uncertainty surrounding Covid-19 and the high levels of inflation it has generated.
The company closed 2021 under pressure from the scarcity of chips that has delayed the delivery of new vehicles.
“We want to get back to the earlier rhythm in all segments,” Tejeda said. “The results of that growth will be better seen toward the second half of this year”.
He said that the possibilities for organic growth can arise in each of the company’s lines of business.
Traxión sees opportunities for its personnel transportation division in regional markets, such as the industrial cities of Mexico’s Bajío region and the country’s north, as well as in tourist destinations such as Cancún.
The growth of its freight business will be mainly based on specialized, value-added products, while its logistics and technology segment, which has stood out in recent quarters due to the growth of e-commerce, will see double-digit growth, but at a slower pace than in 2020.
Read More: Mexico’s 2022 M&A Outlook Cloudier After Surge in Deals This Year
Record Returns
The company’s share price recorded the fifth-highest returns of the 140 issuers on the Mexican Stock Exchange (BMV), with a 105.81% price increase at the close of 2021, according to Bloomberg data.
Traxión launched on the Mexican Stock Exchange (BMV) in 2017. Since then, to the close of last year, its shares have risen by 124.95%, with corporate results and fundamentals being the main catalysts of that increase.
“In 2021, the company delivered results comparable to 2020. In fact, there were two quarters during the pandemic that saw record results,” Tejeda said
Tejeda said the market rewarded the company’s results with a 106% hike in its share price. However, the company still has space to grow as the share price is still below that of other companies in the sector, Tejeda said.
“We believe the EBITDA multiple is still low because it is still below times seven, in comparison with foreign firms, which have multiples of above 12,” he said, adding that there are opportunities to unlock value due to the company’s results, and asset-light projects will be a key factor in enabling that growth.
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