Motus drives earnings growth through tough motor markets
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CAPE TOWN - MOTUS Holdings declared an interim dividend and bolstered its balance sheet in the six months to December 31 after its diversified offering buffered it against declining trading conditions in the economy, chief executive Osman Arbee said yesterday.
Headline earnings a share increased 2 percent to 526 cents while an interim dividend of 160c was declared, versus no dividend declared at the same time last year. Debt to equity more than halved to 24 percent from 74 percent, this after free cash flow from operations shot up to R4.76 billion from R1.12bn.
The robust performance was achieved against a comparative pre-Covid period, Arbee said in an interview. Through the six months the focus had been on preserving cash and adapting to new operating realities and elevated levels of uncertainty.
He said the performance was also boosted by the group's relatively young and entrepreneurial management team, whose average age was 45, and who had on average 15 to 20 years experience in the motor industry. An improved performance in the pre-owned vehicle category in South Africa, new and pre-owned vehicle sales in international operations, and growth in the Aftermarket Parts segment resulted in a 6 percent improvement in overall revenue.
This was partly offset by lower revenue in the car rental business and lower workshop activity levels. The group sold some 80 000 vehicles in South Africa through the period.
Operating profit fell 6 percent to R1.7bn, mainly due to reduced car rental income in the retail and rental and financial services segments, and lower margins from a shift in consumer behaviour to pre-owned and entry level vehicles, as well as more affordable parts in the aftermarket parts business.
This was mitigated by a 4 percent decline in operating expenses. Pre-tax profit was up 4 percent to R1.29bn.
Arbee said that so far, the second half of the financial year was in line with the last months of 2020, and possible risks to the outlook included another hard Covid-19 lockdown, which he did not anticipate at this stage.
The import and distribution division reported a 2 percent decline in operating profit due to lower volumes of vehicle and parts sales, reduced margins as a result of the change in mix of vehicles, higher costing rates due to the weaker Rand and increased freight costs.
The retail and rental division saw revenue increase 5 percent due to increased revenue from the importer dealers, Auto Pedigree, and positive contributions from the UK and Australia. Revenue fell 6 percent in the financial services segment, impacted by lower average mileages travelled by service and maintenance plan customers, coupled with reduced fleet rental income from external rental companies.
Servicing pent-up demand post the Covid19 lockdown saw the aftermarket parts segment's
revenue and operating profit increase 10 percent and 8 percent respectively.
Inventory availability assisted performance, as well as reducing the fixed cost base and leveraging synergies via the group‘s distribution centre in China.
Two achievements in the period included the launch of motus.cars and Motus Select. motus.cars allows customers to shop for new vehicle models from 23 original equipment manufacturers and pre-owned vehicles, all on one platform from their computers or smartphones.
Motus Select would be the brand in the retail division to sell all brands of pre-owned vehicles. There were already more than 20 dealerships in the Motus Select network, providing access to 1 500 pre-owned vehicles.
Motus shares closed 0.43 percent higher at R71.40 on the JSE yesterday.