Motus shares jump in spite of headline earnings alert
CAPE TOWN – Motus Holdings’ share price surged 7.8 percent to R33.31 on Friday even after the international motor group warned that normalised headline earnings a share might fall 60-70 percent in the year to June 30 due to the impact of the Covid-19 pandemic.
The group experienced a big drop in demand for its products and services through national lockdowns. Its operations were temporarily closed in most of the countries in which it operates.
In South Africa, the automotive industry was allowed to return to trading in a phased approach. Vehicle licence and registration offices only started opening in the first week of this month.
In the UK, all showrooms and workshops reopened on June 1, with no restrictions on the number of staff.
In Australia, all the group’s businesses remained open, albeit at reduced sales and servicing of vehicles.
In South Africa, there are early indications of improvement in vehicle sales this month compared with the last month. The group grew market share last month and sold one out of every four vehicles in the country.
Rationalisation of the dealership footprint and consideration towards a multi-franchising model where appropriate were being considered.
Annuity income streams continued to underpin earnings in the financial services businesses, although certain revenues have been negatively impacted by the pandemic.
Since the easing of the lockdown, the aftermarket parts business has seen demand recovering well to service a pent-up demand. Stock availability was back to pre-lockdown levels as most containers had been cleared at ports.
In the vehicle rental business, the fleet was being reduced by 40 percent, the workforce was being reduced by 50 to 60 percent and 20 branches would be closed.
Motus did not expect it would be forced to break debt covenants as at June 30, and it had sufficient unutilised banking facilities available to fund normal trading operations.
Funders had also agreed to relax banking covenants until the next reporting period to December 31, 2020.