Motus sees half-year profit surging up to 55% amid global supply disruptions

Group expects to see inventory supplies normalise in 2023 financial year.
Image: Supplied

JSE-listed automotive group Motus Holdings expects profits for the six months to end December 2021 to rise by between 45% and 55%, as vehicle sales continue to see a recovery across its operating regions, the group said in a trading statement on Tuesday.

Motus says it expects its headline earnings per share (Heps) for the half-year period to fall within 763 cents and 815 cents per share.

Despite facing tough trading years in 2020 and 2021 due to global supply chain delays and microchip shortages, the group – which has business segments participating in all parts of the automotive value chain – says its liquidity position remains strong.

The importers and distributors of vehicle brands like Hyundai, Kia and Mitsubishi motors, says it expects its operating profit for the reporting period to increase by between 20% and 26% to between R2.1 million and R2.2 million.

“Debt to equity levels remain below targeted levels, projected to end at below 35% for the six-month period ended December 31, 2021,” Motus says in a Sens statement.

The group added that it remains within agreed bank covenant levels and has sufficient liquidity headroom to explore future growth.

Recovery in new vehicle sales

The automotive industry in parts of Africa, the United Kingdom (UK) and Australia – where Motus operates – recorded growth in new vehicles sales in 2021.

Read: New vehicle sales in 2021 exceed expectations

In South Africa, the Automotive Business Council for South Africa (Naamsa) recorded a 22% rise in vehicle sales, up from 380 206 vehicles sold in 2020 to 464 122 vehicles in the 12 months to end December 2021.

The group says it expects vehicle sales for the financial year ending June 2022 to increase to between 470 000 and 490 00, up from 445 319 in the previous comparative period.

In the UK, the increase in demand for home deliveries saw a 21% rise in light commercial vehicle volumes. At the same time, heavy commercial vehicle sales also saw an uptick with sales for the calendar year seen up by 13%.

Global supply chain disruptions

According to the group, global supply chain disruptions continue to manifest and impact on the delivery of vehicles, panels and parts, resulting in “substantial increases in freight and logistics costs, negatively impacting operating margins.”

“Our four importer brands and the 21 non-owned brands are fortunate in that they have an extensive model range which enables them to focus on available stock,” Motus says.

“While there are shortages of certain derivatives at different times, we are still able to offer the customer a wide selection of brands and models.”

The shortage of parts needed to manufacture new cars and the delays related to importing new models ushered in the shift in demand towards the used-car market.

“Strong demand for pre-owned vehicles across all geographies continues on the back of the  shortage of new vehicles,” Motus says.

Read: Pre-owned vehicles selling for more than book value – Motus CEO

However, this solution to one problem is now experiencing its own set of problems, as the vehicle retailer reports a short supply of pre-owned vehicles from car rental companies.

Motus says it expects to start seeing normalisation in inventory supplies in the first quarter of the 2023 financial year.

The group will be releasing its interim financial results for the six months ended December 31, 2021 on Tuesday, February 22, 2022.

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