Published Date: 2021-11-19 | Source: INCE|Community | Author: The Finance Ghost
Motus has released a trading statement for the six months to December 2021. There are still a few weeks of trading left this year of course, but the management team is comfortable that headline earnings per share (HEPS) will be at least 20% higher than in the prior period, which triggers a trading statement under JSE rules.
Motus has used the opportunity to give an operational update as well. It's a fascinating time in the industry currently, with used cars appreciating in price and a shortage of new cars due to international supply chain issues.
Vehicle sales are recovering despite these challenges. Motus' management team expects new vehicle sales of between 440,000 and 460,000 in South Africa this year, well up on 380,500 in the highly disrupted prior period. The UK and Australian markets are also seeing higher sales compared to the prior period.
There's a shortage of pre-owned vehicles at the moment from the car rental companies in the industry. They destocked heavily during the worst of the pandemic and are now building up their fleets again, which pulls stock out of the pre-owned market.
Motus currently has 14,000 vehicles in its Europcar rental fleet vs. 9,000 during lockdowns. This will increase to 15,500 during December 2021. The rental business is operating at utilisation levels of 70%.
To manage the stock shortage, Motus claims to be benefitting from "investment in technology" - referencing a platform called motus.cars and the acquisition of getWorth.
The group is managing the supply chain challenges and pressure on margins by focusing on available stock across the four importer brands and 21 non-owned brands. While some models or derivatives face shortages at times, there are other models to offer.
Where Motus does raise a concern is on the availability of panels and parts, with emergency supplies brought in by air. That won't be a cheap exercise. Thankfully, Motus expects the inventory situation to normalise by the middle of next year.
The balance sheet is in good shape with debt-to-equity levels expected to be below 50% by the end of December.
Motus has repurchased 2.4 million shares at an average price of R100.82 per share since 1 July 2021. The current price is around R106 per share, up more than 80% year-to-date.