CMH earnings stall on Covid-19


CMH earnings stall on Covid-19

Published Date: 2020-10-20 | Source: Stephen Gunnion | Author: Stephen Gunnion

CMH earnings stall on Covid-19

The automotive group is paying a dividend of 100c a share as its business returns to some form of normality and predictability.

Combined Motor Holdings has reported a first-half loss after it closed all of its operations at the height of the lockdown. However, the automotive group says its businesses generated positive returns once they resumed full service after a phased reopening in June. And after deferring a final dividend last year due to Covid-19 uncertainty, it's now paying out 100c per share due to the return to some form of normality and predictability.

CMH operates car dealerships and sells spare parts and vehicle services. It also has a car hire division, which was most severely affected by the lockdown and will take the longest to recover. As its activities weren't classified as essential services, they were effectively closed from 27 March until the phased opening of 30%, mainly in the parts and service departments, on 12 May, with full trading resuming from 8 June.

Going into the lockdown, CMB said it was soundly placed in terms of equity reserves and cash resources. Despite sticking to its commitment to buy a R72 million property and a replacement parts business for R24 million, it managed to end August with R609 million in cash resources and no additional borrowings due to its focus on cash management.

Revenue for the six months to end-August fell 38% to R3.55 billion and operating profit declined by 76% to R48.6 million. It reported a loss of R14.3 million for the period, down from a R90.5 million profit last year. That translated into a 19c loss per share and a headline loss of 14.1c per share, down from earnings of 120.9c previously.

The company said it had right-sized its car hire business by reducing staff and cutting overhead expenses. It liquidated its fleet of vehicles to the extent of a net R160 million over the period and settled the corresponding borrowings. It said the growth in hire days had been slow but steady, off a zero base, with domestic business and leisure flights resuming in July and August.

In the absence of a setback regarding the economic effects of the pandemic, CMH said it intended to return to the payment of dividends in line with headline earnings.

CMH's shares closed unchanged at R13.26 yesterday.

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