Motus warns of sluggish new vehicle market as buyers seek out pre-owned
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MOTUS Holdings said yesterday that it expects headline earnings per share to be more than 1 000 cents for the year to June 30, compared with 296 cents last year when it traded through the pandemic.
Earnings per share for South Africa’s biggest distributor of vehicles was expected to be more than 1 000 cents versus 165 cents in the 2020 financial year.
The share price was up 2.27 percent to R95.35 yesterday afternoon, with the price well up from R33.23 at the same date a year before.
“The new vehicle markets in the geographies in which we operate continue to be affected by weak macroeconomic environments. Vehicle sales are under pressure as consumers postpone purchases and, in South Africa specifically, trade down to more affordable entry level new or pre-owned vehicles,” the group said in a trading update yesterday.
The car rental business unit’s recovery remained slow due to limited travel by the corporate and government sectors, and limited international and local tourism, coupled with price competitiveness in the market.
However, there were signs of an increase in local leisure and business travel, Motus’ management said.
The financial services business remained resilient and performance was being protected by annuity income and pre-paid plans.
The business had, however, been adversely impacted by lower vehicle sales, including sales to vehicle rental companies. The performance of the bank joint ventures remained under pressure, and management did not anticipate profit shares for the current financial year.
The after market parts business was positively impacted by stock availability, servicing of pent-up demand, increased customer base and growing market share.
Motus anticipated revenue to be up 15 to 25 percent, while operating profit was expected to be between 65 to 87 percent higher at R3.52-R4 billion.
Attributable profit was expected to rise more than 100 percent to between R1.8bn and R2.2bn, compared with R306m last year.
“The economies in the UK and Australia are anticipated to recover sooner as these are matured economies, the vaccination roll-out programmes are faster and levels of infection are under control. The SA economy will take much longer to recover to preCovid levels,” the group said.
The group buys 70 percent of its vehicles in US dollars.
Strong demand for pre-owned vehicles continued on the back of the unavailability of new vehicles.
The fixed cost base was reduced and synergies were achieved through the distribution centre in China.
The free cash flow position after the car rental de-fleet was strong as net working capital and car rental fleets were at abnormally low levels. Net debt to equity was forecast to be below 45 percent for the year and liquidity strong.