Automotive group Motus plans to make acquisitions in the Aftermarket Parts business after robust cash generation in 2022

Motus, the automotive group, sharply lifted its dividend 71 percent to 710 cents in 2022 and remains in a robust financial position to support investment in growth and acquisitions, to pay dividends and to consider share repurchases.

A final dividend of 435 cents per share was declared yesterday. This despite many headwinds, and after headline earnings per share increased by 72 percent to 2 025 cents, following a 57 percent increase in attributable profit to R3.29 billion.

“The strength of the group lies in our integrated business model, diversification and scale. Despite macro challenges faced around the globe, Motus remains resilient and sufficiently agile to navigate the environment and capitalise on opportunities. We expect to deliver positive earnings growth and a solid financial position for the 12 months to June 30, 2023,” CEO Osman Arbee said yesterday.

“We overcame many challenges last year, and yes, there are still many uncertainties, but we feel there is still fuel in the tank at Motus,” Arbee said in a telephone interview.

Shortages of certain new vehicles following pandemic related plant shutdowns and supply chain issues was still a problem, with for example, waiting times of 3-7 months for some new vehicles in South Africa, but the group had sufficient lower priced new vehicles such as from Kia, Renault and Hyundai, he said

He said although consumer and business sentiment was unlikely to become more upbeat in the short to medium term, Motus was focused on deepening competitiveness across the automotive value chain, driving organic growth through optimisation and innovation, and leveraging capabilities and networks.

He said expansion would include bolt-on and complementary acquisitions, locally and internationally. Acquisitions would also be explored in the Aftermarkets Parts business. Automotive industry aligned technology businesses would also be considered, he said.

In the past year the Aftermarket Parts segment increased revenue and operating profit by 12 percent and 11 percent respectively. The recently acquired FAI Automotive in the UK was included for nine months from October 1, 2021 and exceeded revenue and operating profit expectations.

Despite buying down by customers and above inflationary increases in freight and logistics costs, revenue grew in the South African Aftermarket Parts business. The Asian business performed well as a result of increased foreign activity and improved efficiencies.

The Import and Distribution segment increased revenue 21 percent, as sales to car rental companies and dealers improved, combined with higher selling prices. Sales growth was supported by an expanded vehicle model range.

Operating profit increased by 64 percent mainly due to higher volumes of vehicles sold, increased margins due to inventory shortages as well as increased selling prices, and favourable importer foreign exchange rates.

Revenue in the Retail and Rental segment increased 5 percent. Increased revenue contributions from Retail South Africa, Import dealers and the Car Rental business, were offset by reduced revenue from pre-owned vehicle sales - people held onto their cars globally due to shortages of new vehicles - and the international operations. Operating profit increased 25 percent.

Mobility Solutions increased new business written off the back of increased new vehicle market share in South Africa. Revenue increased 4 percent and operating profit increased 10 percent. This was largely due to higher network sales volumes, the increase in fleet vehicles to car rental companies, recognition of income from bank joint ventures and higher interest income.

The group’s passenger and commercial vehicle businesses, including the UK and Australia, retailed 135 564 new units, a 13 percent increase, and 89 753 pre-owned units, a 17 percent decrease, during the year.

BUSINESS REPORT