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Motus earnings surge on the back of better operating margins and sales of entry-level cars

Motus Holdings drove a ’fantastic’ 51 percent increase in headline earnings per share to 795 cents in the six months to December 31, despite the continuing impact of Covid-19 and rising unemployment and interest rates, chief executive Osman Arbee said yesterday. Photo: Simphiwe Mbokazi/African News Agency (ANA)

Motus Holdings drove a ’fantastic’ 51 percent increase in headline earnings per share to 795 cents in the six months to December 31, despite the continuing impact of Covid-19 and rising unemployment and interest rates, chief executive Osman Arbee said yesterday. Photo: Simphiwe Mbokazi/African News Agency (ANA)

Published Feb 23, 2022

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MOTUS Holdings drove a “fantastic” 51 percent increase in headline earnings per share to 795 cents in the six months to December 31, despite the continuing impact of Covid-19 and rising unemployment and interest rates, chief executive Osman Arbee said yesterday.

He said the group’s financial position remained healthy, with strong cash flows, low gearing and meeting strategic and operational goals.

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For instance, said Arbee, they were mitigating the impact of the global shortage of semiconductors through its sales of smaller vehicles − the shortage was hitting the more sophisticated and higher-priced vehicle models particularly hard, as these cars use many more semiconductors than smaller vehicles.

The 1 percent revenue increase for the six months was derived from increased contributions from new vehicle sales, parts sales and rendering of services, offset by an 8 percent decrease from pre-owned vehicle sales.

Arbee said this decline in used vehicle sales was due to rental fleets having less vehicles to put onto the second-hand market in 2021, following their defleeting in 2020 through the pandemic, and due to consumers holding onto their vehicles longer until the right new vehicle came onto the market.

Group operating profit increased by 23 percent to R2.15 billion following positive contributions from each of the business segments, and pretax profit was 46 percent higher at R1.88bn. The interim dividend was up by a whopping 72 percent to 275 cents per share.

Arbee said they continued to assess potential acquisitions, seek opportunities for share buybacks and pay dividends. “We are pleased with the solid performance… Underpinned by our business model, along with support from financial institutions in assisting their customers to purchase vehicles as well as our agile and focused management, we have grown the business, generated strong financial results with a strong financial position and significant cash flows,” he said.

The impact of the pandemic saw the motor industry having to absorb manufacturing, supply chain and operational disruptions, resulting in vehicle shortages and big increases in production, freight and logistics costs. At Motus this impact was particularly felt in its parts businesses, although he wished the group could improve its stock-levels of new vehicles.

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He said the increase in operating profits was due mainly to the recovery in the automotive and car rental sectors, coupled with increased margins achieved due to inventory shortages and disciplined cost management.

The group’s passenger and commercial vehicle businesses, including the UK and Australia, retailed 66 705 new units, a 16 percent increase, and 47 533 pre-owned units − a 17 percent decrease, during the six-month period.

The import and distribution segment increased revenue by 17 percent as outright sales to car rental companies and dealers improved, combined with higher selling prices. Sales were supported by an expanded vehicle model range.

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The Aftermarket Parts segment reported an increase in revenue. South African revenue was unchanged, while Asian and the UK revenue and operating profit contributed positively.

Motus shares closed 2.08 percent down at R107.31 on the JSE yesterday.

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