Motus withholds dividend as car sales stall


Motus withholds dividend as car sales stall

Published Date: 2020-09-17 | Source: Stephen Gunnion | Author: Stephen Gunnion

Motus withholds dividend as car sales stall

The automotive group says it will reassess the resumption of payouts this year depending on its trading results.

Motus has withheld a final dividend after profits came under pressure due to the impact of the Covid-19 lockdown on vehicle sales in SA, the UK and Australia. The automotive group says the resumption of dividends will be reassessed in the year ahead.

Releasing results for the year to end-June, Motus said it had been tracking ahead of last year in terms of revenue and operating profit until March, when the national lockdown resulted in no trading in SA and limited trading in the UK and Australia in April and limited trading in May and June across all three countries. Its car rental business was also severely impacted due to restrictions on local and international travel.

Sales of new passenger and commercial vehicles fell 14% to 112,833 units across all three geographies while sales of preowned cars and trucks declined by 10% to 75,109 over the year. It attributed the reduced sales to the global crisis, which resulted in a big contraction in the vehicle market. Despite the decline in sales, it said its retail market share improved to 20.2% from 18.9%.

With its business structured around large trading volumes and a large portion of its cost base including property and personnel, it said it was difficult to reduce costs significantly at the onset of the pandemic. After that, additional cost-cutting measures were implemented, including once-off restructuring costs as it aligned its business to the changing economic environment.

In June, the group announced it would close some of its vehicle dealerships due to the contracting market and scale back its car rental operations, which include Europcar and Tempest. It said the process to reduce its workforce through early retirement and retrenchments was largely completed and would be finalised by the end of the month.

Revenue for the year declined by 7.9% to R73.4 billion and operating profit fell 41% to R2.14 billion. Once-off costs included goodwill and intangible asset impairments amounting to R289 million, retrenchment and other closure related expenses totalling R171 million, and a number of impairment costs. That left earnings per share (EPS) 83% lower at 165c per share while headline EPS were down 71% at 296c. Free cash flow generated by its operations was steady at R3 billion.

The company's shares closed 19% higher at R39 yesterday.

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