The CEO of the newly listed car hire, sales and fleet management group Zeda says the holiday season will highlight its improved business strategy, ensuring it has the required staying power even after the silly season.
Zeda, which holds the licence to the Avis brand in SA, officially listed on the JSE main board on Tuesday, after a successful unbundling from industrial major Barloworld.
“This business has predominantly been an airport and tourism-based business,” Ramasela Ganda said. “Now 54% of our business is contractual and has nothing to do with tourism or [airports],” she said.
With a dedicated executive management team and board of directors who will oversee the company’s growth and expansion, the business listed with a value of R3.3bn. Zeda shares were issued on a one-for-one basis for each Barloworld share owned.
Highlighting that the local inbound tourism market is still only operating at 40% of pre-Covid-19 levels, Ganda said due to streamlining by management the group’s endurance and stamina are expected to remain intact.
“You cannot compare the Zeda of today to the business it was pre-Covid-19, because it has fundamentally changed,” she said.
“Management took this business out of the clutches of Covid-19 and in 24 months turned a huge loss into an incredible profit — purely because of capability, clear strategy and execution,” Ganda said.
Since the height of the pandemic in 2020 when the vehicle industry was hard hit by lockdowns, Zeda has embarked on a turnaround strategy to cut costs and right-sized the business.
Fundamental shift
This, Ganda says, has paid off as the group has since been on a growth trajectory with earnings before interest, tax, depreciation and amortisation (Ebitda) surpassing levels achieved before Covid-19.
Ganda outlined that through its fleet of 250,000, which includes heavy-duty vehicles, and due to the fundamental shift, the group is now also involved in financing, utilisation and vehicle management.
Zeda also has 14 car dealerships countrywide.
She said that as the leasing business holds contracts that average from one year to 44 months, the unit is stable, offering long-term returns.
“We compete with the financial institutions when it comes to the financing side, but we do management better and understand the vehicle as an asset,” she said, adding that “that’s where the big returns are sitting, not only in utilisation but in how you manage a vehicle and how you buy it”.
Ganda said Zeda is providing funding through its channels to e-hailing systems, which have become serious contenders in the public transport market.
The company’s fleet of 34,000 allows it to give right of use for either a short or long term “whether in the public or private sector or individuals”, the CEO said.
For its heavy-duty vehicles, Zeda also provides intelligent fuel management systems that record how fuel was used as well as driver behaviour.
Delisted it
The listing has boosted the JSE, which has been plagued by a number of delistings in recent years. The exchange now has 305 companies listed on its platforms compared with 800 in early 2000.
This is not Avis’s first time on the exchange as Avis Southern Africa was listed on the Johannesburg, Namibian and Botswana stock exchanges until 2005 when Barloworld acquired and delisted it.
The return to the bourse comes after Barloworld, which undertook the unbundling as part of its strategy to trim its sprawling portfolio to focus on its core earth-moving equipment and food procurement businesses, moved to integrate the rental business and leasing segments.
Looking ahead, Ganda said the first order of business is to find ways to deepen the usership economy and get more vehicles on the road, beyond the tourist season, which lasts from October to March annually.
Educating the market about 55 year-old Zeda’s business evolution will be part of their efforts.
“Our focus will be to get more vehicles on the road,” and to inform the market that buying a car is unnecessary, she said.
After it began the day trading at R18, Zeda’s share price was down 7.2% at R16.70 by the close, while Barloworld plunged more than 17% to R89.30.
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.