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Zeda CEO Ramasela Ganda. Picture: SUPPLIED
Zeda CEO Ramasela Ganda. Picture: SUPPLIED

Car hire, sales and fleet management group Zeda, which is soon to list on the JSE, says cost-cutting measures and streamlining of operations amid growing rental demand have set it on the right path for a future on its own.

Zeda is due to make its JSE debut on December 13 as it is carved out from industrial major Barloworld, with shareholders to receive one Zeda share for each Barloworld share they own.

In a bid to trim its sprawling portfolio to focus on its core earth-moving equipment and food procurement businesses, Barloworld has divested from several businesses, with Zeda being the latest and one of a handful of companies to list on the JSE this year.

“When we were part of the group ... we were measured on what made sense to the group and not on what makes sense to our industry,” Zeda CEO Ramasela Ganda told Business Day, as she recounted the sleepless nights her team has spent in preparation for the move.

She said that with the separate listing “we can now allocate capital in the right areas with no restrictions and we can now access the market to get funding”, highlighting that the group was starting to implement its own capital allocation framework.

Operating in 10 other African countries, the company manages an average fleet of about 57,000 vehicles with 14 retail dealerships across SA.

The group, which was among those hardest hit by lockdown restrictions, has undergone a restructuring that has enabled it to stage a turnaround that has “exceeded expectations”.

In a prelisting statement on Monday Zeda outlined that mobility is “undergoing positive changes” with a noticeable pickup in demand, particularly in the corporate and small, medium and micro enterprises segments.

The group said its diversifying strategy had resulted in a strong set of maiden results where revenue for the year to end-September rose 6.6% to R8.1bn, while operating profit was up 52.8% to R1.2bn, delivering a margin of 15.5% from 10.8% previously.

The spin-off group said a buoyant used car market amid an easing of pandemic-imposed restrictions and the implementation of other portfolio optimisation strategies were among the key factors that shored up revenue.

This was despite a lower size fleet and recovery in the inbound market lagging behind.

Ganda said there was room for further recovery as the group was only still operating at 40% of total capacity, with next year's forecast at 75%.

The group reported that sustained demand for subscription offerings and the recovery in domestic and corporate travel had seen revenue in its car rental business rise 9.7% to R5.9bn.

Operating profit surged 159.3% to R861m to surpass pre-Covid-19 levels, resulting in the operating profit margin more than doubling from 6.1% in the previous year to 14.4%.

Conversely, the leasing business Avis Fleet reported revenue was down 0.9% to R2.1bn due to an adverse outlook on parts pricing and a resultant actuarial valuation adjustment, interest rates and foreign currency fluctuation.

Leasing revenue, which it said was affected by external factors on the maintenance front, grew 1.9% to R1.7bn.

Ganda said that looking ahead she was confident all the fundamentals were in place as cost-cutting and streamlining done by new management, including closing underperforming businesses and “rightsizing the business from all angles”, will ensure Zeda would be able to stand on its own two feet.

“So for us from a shareholders’ point of view, I think we have done exceptionally well with the prelisting to prepare us for the listing,” she said.

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