SA’s largest automotive group, Motus, has built up a healthy cash pile that will enable it to weather a second hard lockdown or any other economic shocks that may happen in 2021.
Motus’s businesses had seen an uptick in activity after the hard lockdown ended in the middle of 2020 and its management had decreased various costs including job cuts, enabling the group to amass R4.8bn in cash in the six months to December from R1.12bn the previous corresponding period.
“We are in a very healthy position. If anything dramatic happens in our markets, such as another hard lockdown, we have liquidity which will help us manage unforeseen costs,” CEO Osman Arbee said.
As a result of its strong cash flow, Motus declared an interim dividend of 160c per share, which amounted to nearly a third of headline earnings per share.
Motus did not pay a dividend for the six months to end-December 2019.
“We have created a new normal for ourselves as a company. Since we exited the hard lockdown of early 2020, our customers have returned and Motus has managed to perform admirably,” Arbee said.
Profit after tax jumped 4% to R1.28bn for the six months to December 2020.
“Our ability to offer a range of services from our group of businesses has held us in good stead. Our customers have not disappeared. We can now provide more value-for-money products, be it smaller SUVs, pre-owned cars or a wider array of aftermarket parts,” Arbee said.
Revenue rose 6% to R44.3bn for the interim period to end-December 2020. Headline earnings per share of 526c were earned during the period, up 2% from 517c in the comparative 2019 period.
The company’s debt-to-equity ratio was also low at 24%, compared with 74% at the end of 2019.
The Motus group is made up of car import and distribution, financial services, vehicle retail and rental, as well as aftermarket parts.
The import and distribution segment reported a 2% decline in operating profit due to lower volumes of vehicle and parts sales, reduced margins as a result of the change in mix of vehicles, higher costing rates due to the weaker rand and increased freight costs.
This was partly offset by competitive pricing and cost containment.
The retail and rental segment reported a 5% increase in revenue as a result of increased revenue attributable to importer dealers Auto Pedigree, and positive contributions from the UK and Australia.
Revenue decreased 6% within the financial services segment, impacted by lower average mileages travelled by service and maintenance plan customers, coupled with reduced fleet rental income from external rental companies.
Pent-up demand for servicing saw the vehicle Aftermarket Parts segment’s revenue and operating profit increase 10% and 8%, respectively.
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.