After 12 years under the ownership of the Bancroft investment fund, Dumagas was bought by the Omnia Capital investment group at the beginning of 2023. The Craiova-based transport firm has undergone several strategic transformations aimed at establishing a healthy portfolio of customers who need quality and complex services for which they are willing to pay the right price. A commercial department with a modular sales team was set up, investment was made in digitalization and the management structure was reconfigured. After a year of transformation, Dumagas closes 2023 with an estimated turnover of €34.43 million and a profit of €1.66 million.
Matei Ladea and Bogdan Georgescu, one a lawyer with expertise in management and entrepreneurship, the other a banker with experience in trading, started in the pandemic to provide advice to companies in difficulty and to help them get through the difficult period. Both had experience in mergers and acquisitions, so they set up the Omnia Capital investment group, which in early 2023 became the owner of one of Romania’s leading transport companies, Dumagas Transport.
Matei Ladea speaks about what the new ownership changed at Dumagas Transport in the first year after the takeover and what’s next in 2024.
Tranzit: How did Omnia Capital come to take over Dumagas Transport?
Matei Ladea: The transport market came to us by chance in 2020 when the UK transport sector was badly hit and we, in partnership with an UK investment fund, Opulentia Capital, started working on creating a trans-European transport group. Our partners had freight forwarders in the UK and we had to find hauliers in Romania to sell their business and do the cross-border merger. We couldn’t find carriers who wanted to sell their business at market prices, according to valuation formulas that the market could support, so that transactions could be concluded economically viable. When companies heard that an UK fund wanted to buy their business, they would put a one more zero at the price, without it necessarily being the real price.
We saw 1,400 firms, 500 from the UK and 900 from Romania. With 50 we had extensive discussions, made analyses, and with 3-5 we went as far as signing. One even changed its mind at the signing, when the war in Ukraine came, because it suddenly had some opportunities there.
How did Dumagas distinguish itself from other companies?
When we approached the 900 companies, Dumagas ignored our request. In 2022 they came out for sale and we are happy that we managed to buy it. In November 2022 we started negotiations and in January 2023 the deal was closed. The team at Dumagas has considerable seniority, lots of knowledge in the field, it worked with clear procedures and made all the documents available in record time. This was the first signal that we were doing a very good deal. Everything was automated, the response came promptly, we didn’t have to give explanations and ask for clarifications. In the Due Diligence process we met very good professionals in Craiova. I have seen such professional capacity only in 2-3 companies in Romania and more abroad.
When analyzing a company, usually everyone looks at the financial indicators, but often the profit can be influenced by external factors or the shareholder’s vision of the company’s path. Dumagas had a fairly high turnover for transport, so clearly the company had potential, but was not making profit. It had large FMCG customers who would feel if things were not going well, so operational procedures were good. What we think has been missing to make a profit in recent years is the vision and appetite for tackling new markets. The commercial component of the business has been missing.
What have you changed in the organization of the company after the takeover?
We came in with a modular sales team, which we have used in other businesses, targeted new markets and gave up at contracts that were not making economic sense.
We have account managers and transport managers for each customer, i.e. for customer relations, drivers and dispatchers, which delivers performance, but this costs, and if you want a low rate you can’t pay these people, so we need customers who prioritize quality assurance, and are willing to pay for it. I think each carrier has a specific that is right for a specific customer and the opposite. We looked at routes and customers and focused on those who understand the value Dumagas adds. That doesn’t mean that the routes we gave up are not for very good customers, but, at this point, we have different visions and priorities. When price is a priority that requires optimizations that we cannot make, we are not the solution.
The average seniority is 16 years in Dumagas at management level and 4 years for drivers. At other companies on the market, the drivers rotate at almost 8-12 months. To give people stability we have to offer them conditions, that’s why we work to a certain standard. So we simply looked for our place in the market, we said what we can offer and what we know to do. We work with discount retailers who put a lot of pressure on price because their customers do that too. And Dumagas manages to offer them the best price in relation to the quality of the service provided for them.
But when cascading cost increases come, you have to be able to pass them on quickly. Our customers understand the need for a partnership with the carrier. Those with whom we are developing and expanding our collaboration are companies that have very good operational know-how in their industry and understand that transport is essential to their business to move goods and achieve their business results in optimal conditions. It is the basic service of the economy, one of the first in the evolution of the economy.
Are you directly involved in the management of the company?
Both myself and Bogdan Georgescu, my partner, are members of the company’s Board of Directors, but the operational management is in Craiova: Claudiu Corendea – CEO, Marian Călin – COO, Monica Florescu – Economic Director, Emil Vlad – Business Intelligence Manager, Roxana Danciu – Specialized Transport and Fabian Stoenică – Logistics & Warehousing.
We do not normally get involved in the management of the companies we own. At Dumagas we got involved because there were many areas where we could add a lot of value – especially on commercial, sales, marketing.
With what financial results do you close 2023?
We have now just reached the market, we have just stabilised the company and the results represent what could be done in 11 months, because we were not full shareholders until February 2023, from the date of the Transaction Closing. We have increased our workload compared to 2022, but the turnover has decreased, because diesel has become cheaper. We have driven more kilometers, but we are re-invoicing diesel to the customer, and as the price of diesel has fallen on average by 25% compared to last year, turnover has fallen to around €34.43 million. In contrast, profit was much better than in 2022: €1.66 million.
How do you intend to expand after Dumagas chapter?
What we like a lot about Dumagas is that it has a complex operational structure, we do not only serve one field, for example refrigeration, but also automotive, even if we are one of the biggest transporters in Romania of controlled temperature; we work with 120 semitrailers, all dual-temp, so we can offer a mix of temperatures that allows customers to lower transport costs.
We do car transport with our own fleet and parts transport with mega semitrailers.
We also offer ADR transport for many years, in fact that’s how the company was founded, with gas transport. We work with rare gases – hydrogen, oxygen, argon, helium – which requires more specialization. We also transport general cargo, petrochemicals, electronics, household appliances, FMCG, paper, building materials, and do logistics and warehousing activities.
We are in the process of TAPA authorisation and we are planning to attack other segments of pharmaceutical transport and car transport. The latter is an industry with a lot of potential and an increased barrier to entry in the market, not everyone can buy a car transporter as in the past. Car customers are disappointed with the way things have been going over the last year and prefer multi-year contracts that give them the long-term price guarantee, and we are making investments to give it to them. This year car transport prices have risen sharply because there was no more capacity in the market. We had a renegotiation, on a route that the customer took out to market test, because the market price was much higher than they were willing to accept. The market confirmed the high price, but Dumagas chose to give up a large margin that it could have added at some point. We had a constructive discussion and executed the contract for another year, under conditions that would allow us to make a profit and the client to be sustainable, as we prioritise long-term partnerships and not short-term profits.
Do you look for other acquisitions that offer synergies to Dumagas business?
We are always looking for opportunities. After we bought Dumagas we received many offers and handled every contact responsibly. We look at many companies, but we don’t make acquisitions just for the sake of it. We are not looking for trucks or drivers, but for a mix of operational capacity, know-how, trucks in good condition, experienced drivers, an organisational culture that matches ours, so that we can perform with those companies and grow together. We can do partial or full aquisitions, we can invest etc. We are not a hedge fund, so we don’t have to follow one line.
We had an extended review of a logistics firm this year, at the last minute we decided not to go ahead, because of organisational culture and size difficulties. And now we have a deal in the pipeline, which we will complete in the first few months of the year, a firm that fits well with Dumagas, but also brings innovation to transport.
What industries does Omnia Capital have investments in?
The investment group is also active in 1 2 3 Credit, Romania’s first credit marketplace for individuals. We are not an NFI, but we promote the banks’ offers, we are integrated with them, and there is no cost for the client to access the portal. On the contrary, he has a reduced cost if he wants to do everything online. The fastest credit was received in two hours, from accessing the market place to receiving the money in the account.
We also have a plastics group in the UK, companies that partner to benefit from economies of scale. As I said, we are about to close a non-majority acquisition of an innovative transport services company and we have many more under consideration.
We can also make investments in the IT area, but only if we are talking about businesses that use digitalisation to simplify a traditional economic process, such as software in transport, not software development in general.
Are you investing in digitising the company or was the company quite digitised?
I wouldn’t say that Dumagas was digitised, it was very well-processed, but we are accelerating that through digitisation. We bought Apollo from Smart Touch Technologies to make life easier for the team. The team is very important to us and we want them to have access to the best technology. At the same time we will also gain operational efficiency and become more competitive.
We are working on updating the TMS and are also adding a powerful AI component to do pattern analysis. We are now using Microsoft Power BI for data interpretation and that also has a machine learning part. So we make forecasts for customers sometimes better than they do. And we aim to reach an error rate of less than 3% in shipment planning.
