Motus first-half profits jump by 51%

Motus, which runs one of SA’s biggest car dealerships, reported a 51% jump in first-half profits as the opening up and recovery of the SA economy enabled individuals and businesses to buy durable goods.

Led by CEO Osman Arbee, Motus sells new and pre-owned cars through its network of more than 300 car dealerships in SA, which took a knock in the initial stages of the coronavirus pandemic lockdown.  Its operations also straddle the UK and Australia and have a presence in Asia.

Motus said on Tuesday that headline earnings per share rose 51% to R7.95 in the six months to December, compared with the same period a year earlier, which was skewed by lockdown restrictions.

The company said it increased market share in its main SA market, supported by an expansion of its vehicle model range, particularly in the entry-level and small to medium SUV categories due to consumers buying down, as well as new model launches.

“We are pleased with the solid performance and fantastic income statement, the earnings growth and good cash generation,” Arbee told Business Day, adding that the company would pay a half-year dividend of R2.75 per share, up from R1.60 a year ago.

Global chip supply shortages resulted in a drop in new vehicle production, boosting demand for existing new stock. Motus’s market share in SA rose to 22.6% from 20.2% year on year, particularly in the growing entry-level and small to medium SUV categories due to consumers buying down, coupled with new model launches. 

“Our brands that did particularly well did so because there was stock available, so we had the ability to supply the cars when the market needed,” he said, explaining that there was a shortage of good quality used car rental vehicles in the market, which meant consumers were demanding a lot more of the used cars.

“As a result, people are holding on to their cars, car rental companies have not been fleeted and that’s caused a major vacuum of pre-owned cars,” Arbee said, adding that this was a global phenomenon.

The SA operations contributed 66% to revenue and 82% to operating profit during the period, with the remainder being contributed by the UK, Australia and Southeast Asia.

The group’s passenger and commercial vehicle businesses, including the UK and Australia, which encountered severe lockdowns, retailed 66,705 new units — up 16% on an annual basis. By contrast, the sales of pre-owned vehicles dropped 17% to 47,533 units.

According to Naamsa, the Automotive Business Council, SA retailed 236,682 units for the six months to December 31, an 8.6% increase on the prior period, which registered 217,860 units.

Group revenue was flat at R44.8bn, but operating profit rose 23% to R2.14bn. 

“The increased operating profit is mainly as a result of the recovery of the automotive and car rental sectors, which positively impacted gross income, coupled with increased margins achieved due to inventory shortages and disciplined cost management,” Motus said.

The four segments of the company valued at R20.4bn on the JSE contributed towards the increase, with import and distribution supplying the bulk at R189m or 44% of the growth. The retail and rental business brought R150m, while the mobility solutions and aftermarket parts each contributed R25m for the six-month period.

Motus was listed on the JSE in November 2018, following its unbundling from Imperial Holdings. The share price fell 2.08% to trade at R107.31 on Tuesday, giving it a market capitalisation of R20.181bn.

Update: February 22 2022
This story has been updated with CEO comment and new information.

mahlangua@businesslive.co.za/ gumedemi@businesslive.co.za