Motus says interim profitability to December was firmer.
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Motus says interim profitability to December was firmer despite a stronger rand forcing the company to incur foreign exchange losses amounting to R91 million over the half year period to the end of December while the UK market struggled with low business confidence.
For the interim period to end December, operating profits in Motus firmed up by 8% to R2.7 billion while net finance costs decreased by 23% to R780 million. This yielded a 19% firming up in the company’s half year headline earnings per share to 807 cents, prompting it to declare a 25% stronger interim dividend at 300 cents per share.
Motous CEO, Ockert Janse van Rensburg, however, said that in the company’s UK market, there is low business confidence.
“There is low business confidence in the UK market where there is deferral of commercial truck purchases. That is the pressure that is in that market,” Janse van Rensberg said during a briefing of the company’s financial results on Wednesday.
Consumers in the company’s other international aftermarket parts segment also “have been under pressure” due to toughening economic conditions.
Janse van Rensberg said, “If a consumer defers spending money on after-market it means the consumer is feeling the pinch of the economy.”
South Africa was, nonetheless, a bright spot for Motus although it still has some cleaning up and refocusing to do on some segments of the business. The South Africa retail category had done well over the half year with profit growth of 22%, with Honda, KIA and Toyota performing well.
Motus will now intensify focus on turning around some brands such as VW that are facing pressure and others that have a shrinking market share as the company strives to meet evolving customer needs in areas of aftermarket, car rental and through vehicle multi franchise strategies.
Brenda Baijnath, the chief financial officer for Motus, said the company was “taking advantage of the momentum in SA”, which had contributed about 60% of revenues for the period.
“We have a robust cash generation trade driven by strong vehicle sales and margins. Our debt is under control and the balance sheet is deleveraging,” she said.
Nonetheless, a rand that has been stronger over the past few months has also meant that the company incurred some foreign exchange losses amounting to R91m.
Baijnath said this was “because of the way we operate, importing vehicles” although Motus has forward cover arrangements.
The foreign exchange losses of the period under review have prompted Motus to “take on additional cover at better rates” with a better performance expected for the second half of the year.
Group revenues increased by 3% to R57,7bn, with new vehicle sales increasing by R1bn or 4% supported by increased volumes and vehicle rental returns.
Motus’ passenger and commercial vehicle businesses, including the UK and Australia, sold 111 911 overall vehicle units compared to 105 507 a year earlier. Vehicle sales for the half year are comprised of 65 127 new units and 46 784 pre-owned units.
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