Motus is expecting a 20% to 30% decrease in headline earnings per share for the interim period to the end of December 2023.
Motus, the South African-diversified, but non-manufacturing automobile company, expects interim 630 cents and 720 cents, per share. Its shares traded 2.15% weak in morning trade on the JSE yesterday, but are marginally higher by 0.69% in the year-to-date comparative.
The expected plunge in interim headline earnings per share by Motus coincides with a “tough” trading environment “marked by continuous power outages, high interest rates fuel prices and energy costs”, it said.
“As a result of these factors, consumers are experiencing considerable strain on their disposable income. The higher-than-normal vehicle and parts price inflation, exacerbated by the impact of the weak rand, has negatively impacted affordability,” Motus said in a trading update released yesterday.
Another key drawback for the company has been the “oversupply” of vehicles from Original Equipment Manufacturers (OEMs) as well as additional “discounts" aimed at generating vehicle sales. This had “negatively” impacted margins for Motus.
The company’s strategies of internationalisation and diversification away from profitability in vehicle sales were, however, providing some support “for the areas that are more severely impacted” by the constrained consumer spending parity.
Despite the projected lowering in headline earnings per share as well as attendant headwinds, Motus is on course to deliver double-digit revenue growth and stable operating profit for the six months to December 31, 2023, it said.
This was consistent with the guidance it provided in August 2023. In spite of the anticipated uplift in revenue and operating profit, the company’s higher average working capital and vehicles-for-hire levels, acquisitions concluded during the 2023 financial year and high interest rates in its markets are projected to drive finance costs higher for the period under review.
“The Group is actively managing operating and finance costs and closely monitoring working capital, vehicles for hire and debt levels. Management is focusing on variables under their control to reduce stock levels responsibly,” it explained.
Motus has projected that its hiring vehicles levels will reduce by June this year owing to the seasonal nature of the business. The company’s debt to equity is, however, higher than historical thresholds, attributable to “elevated vehicles for hire and inventory” as well as the acquisitions concluded last year.
Nonetheless, Motus says it remains “well within agreed bank covenant levels” as it has “more than sufficient” banking facilities.
Its long-term strategic priorities also remain unchanged and focused on ensuring a heavy presence in South Africa and active participation in select international markets, such as the UK and Australia. Motus also operates in South East Asia as well as Southern and East Africa.
In August, Motus paid a final dividend of 410 cents per ordinary share for its year to end June. It, however, stated that there was “no assurance that a dividend will be paid” in respect of any other financial year.
“Any future dividends will be dependent upon the consolidated operating results, financial condition, investment strategy, capital requirements and other factors affecting the group,” the company said at the time.
For its 2023 full year, Motus recorded a 16% upswing in revenue to R106.3 billion, while attributable profit inched up 2% to R3.3bn, translating to a marginally higher headline earnings per share for the period of 2046 cents.
Although the UK vehicle market grew, its retail volumes for the passenger vehicles were negatively impacted by logistical difficulties. The Australian market’s performance exceeded the prior financial year due to increased supply and the fulfilment of long-standing orders, with shipping delays at the Australian ports persisting.