Zeda Group operates Avis and Budget car hire.
Zeda Group, which operates Avis and Budget car hire, delivering its first set of results after being unbundled from Barloworld, said yesterday that for the six months that ended March 2023, its revenue grew due to tourism and corporate travel after Covid-19 restrictions were lifted.
The car rental, fleet management and leasing business said revenue grew by 26% to R3.3 billion, boosted by strong demand from corporate, inbound and domestic travel.
Its performance helped it to lift basic earnings per share by 27% to 197c, while operating profit increased by 25% to R803 million.
Zeda said the business experienced an exponential increase in inbound travel and corporate business travel, with revenue in both segments surging by 138.7% and 69.5%, respectively, compared to the prior period.
No dividends were declared for the interim period. Last year, the group declared 29c.
Zeda CEO Ramasela Ganda said: ‘’While the operating environment has been challenging, the group benefited from its strong fundamentals and leveraged pockets of opportunity in rental and leasing to grow into less capital-intensive business such as maintenance and other value-added assets’’.
The group, which listed last year, said the supply of fleets improved in the first quarter, which enabled the business to acquire more rental fleets to take advantage of high business activity, especially the return of inbound travel and strong corporate travel.
‘’The application of the fleet management principles and the ability to manage the entire value chain from acquisition, especially the out-of-service fleet, yielded positive results with average utilisation at 75%,’’ it said.
Zeda reported that the leasing business was very stable and remained resilient over a challenging period, with revenue up 6% year on year, driven by a concerted effort to deliver on its strategy of growing the heavy commercial fleet and increasing penetration within corporate and the Greater Africa business.
‘’This was achieved despite the winding down of major public sector contracts. We expect the Leasing business to continue to grow, underpinned by a healthy order book, growth in targeted segments, and a proactive approach to fleet management,’’ it said.
The Car Rental and Leasing business units generated more than 99% of vehicles sold through its used cars retail footprint and online auction platform.
‘’The strong operational capabilities in vehicle procurement to optimise the entry price point, vehicle application management, utilisation, good maintenance history, the condition of the vehicles, and rigorous residual value management all contributed towards the solid returns from used car sales for the six months ended March 31, 2023,’’ it said.
Its total current liabilities increased as at March 2023 compared to the same period in the prior year, standing at R10.4bn from R9.8bn. This was in line with the investments in short-term rental fleet vehicles, which were financed by floor plan facilities of a similar tenure, it said.
Looking ahead, the group said due to the number of headwinds in the Car Rental business, the total car rental activities currently operated at 26.8% of the pre-pandemic levels, with inbound still lagging at just below half of the pre-pandemic levels.
‘’In addition to inbound, an expected increase in international airlines' activities utilising chauffeur-driven vehicles presents us with an opportunity to continue to grow the business further in absolute terms. The growth in the rental business will also be supported by the contracted business, insurance business, subscription, and Corporate segment,’’ it said.
Zeda said in answer to a question from Investec on capital allocation and dividends in its webinar that its board was looking at it. A capital buyback was on the look that directors were looking at in future to give shareholders more value, it said.
The share was down 2.7% at R9.73 in late afternoon trade, with the share 26.58% lower year to date.
BUSINESS REPORT