Motus benefits from Transnet troubles

The trucking industry has been stepping in to fill the gap created by the collapse of Transnet’s freight rail operations — and automotive company Motus is one of those cashing in.

Motus CEO Osman Arbee told Business Day the group was benefiting from the high number of heavy commercial vehicles hauling freight across SA as carriage shifts to the roads amid Transnet’s woes.

“Because of Transnet problems, a lot of companies are using trucks to transport their goods like coal, chrome and copper, and everything else you can think of,” Arbee said. “Yes, Transnet has got its problems, but that’s to our benefit.

“We don’t own those trucks, but I service those trucks, I sell parts to them. When they want a new vehicle, I deliver the new vehicle, so that side of the business is doing better than we thought in the last two [to] three years because the demand is still active,” Arbee said.

Demand for heavy commercial vehicles, parts and servicing has been strong in the context of a rapid rise in truck traffic over the past few years as volumes have declined dramatically at Transnet Freight Rail, particularly on the heavy haul lines carrying exports such as coal, iron ore and manganese.

In contrast to mining companies, which have lost huge export revenues, transport and logistics firms have seen upside, though even that has been diluted by Transnet’s woes.

Motus’ SA parts business contributed positively to revenue in the six months to December, but operating profit was reduced due to delays at the ports, which resulted in increased lead times on imported products, primarily in the last two months of the period.

JSE-listed Motus, which was unbundled from Imperial Holdings and listed on the JSE in 2018, sells one in five new vehicles in SA and owns a network of dealerships in SA, the UK and Australia.

SA’s tough economic environment has weighed on Motus, which felt the strain of high interest rates and competition in the half-year to December.

The tough conditions saw Motus report a 27% drop in half-year profit after new-vehicle sales volumes came under pressure, resulting in a 22% cut in its half-year payout.

However, Motus is confident that its strategy, which prioritises diversification, international expansion and maintaining strong free cash flow generation, will help it weather the storm.

The firm has been sharpening its focus on increasing contributions from international operations and its aftermarket parts business in a bid to reduce reliance on new-vehicle sales as interest rates bite and the cost of owning a vehicle surges.

Arbee said part of that had been Motus’ bid to remain relevant amid a muted vehicle market in SA by offering products and services that were affordable and in high demand.

“The demand is there, and that demand is not the man in the street. It’s the corporate world or it’s warranty work that I get from the OEMs [original equipment manufacturers] so, all in all, they are helping our business as well,” he said.

Motus had additional service outlets inside the businesses of its big corporate clients, which could not afford the time it took to service trucks off-site.

“The trucking business is doing very well for us, so we not complaining about Transnet’s problem,” said the CEO.

gumedemi@businesslive.co.za