Automotive group Motus in positive earnings prediction, Newsline

CAPE TOWN – AUTOMOTIVE group Motus Holdings’ share price increased by up to 18 percent on Friday morning after it released guidance that earnings per share will vary between 430 cents and 505c in the six months to December 31, compared with 479c at the same time a year previously.

The forecast represents earnings per share that is between -10 and 5 percent of that achieved last year, in spite of the impact of tightening Covid-19 restrictions in the UK and Europe, and the continued impact of the virus in other markets.

Motus shares closed 14.39 percent higher at R52.71 on Friday.

The price has rebounded strongly since September 1, when it traded at R27.54.

“The liquidity position remains strong, supported by significant unutilised banking facilities.

“Motus remains well within original bank covenant levels with sufficient headroom,” the directors said in a statement.

The increase in global Covid-19 infections has resulted in many countries having to re-institute restrictions and curfews on people’s movements, especially in Europe and the UK.

While the situation is more positive in South Africa, there remain mixed concerns of a second wave of infections that could be exacerbated by the festive season.

Motus said the UK lockdown that started last Thursday would impact its UK businesses negatively, but the extent was unknown. Government salary support would be re-introduced for November 2020.

In Australia, Melbourne was coming out of lockdown, which was positive for the Ballarat and Packenham businesses, and there had been no further lockdowns in Sydney.

“The uncertainty around the impact and extent of the Covid-19 crisis will not change in the short to medium term. Motus will continue to adapt to the new operating and trading environment as it evolves.”

In South Africa, despite positive developments such as in the fight against corruption, embarking on an infrastructure investment programme, freeing up the electricity supply network, providing greater certainty on land reform and launching broadband spectrum, there remained a possibility of a ratings downgrade at the end of the November.

However, new vehicle sales in South Africa were improving with average volumes for the last four months at 35 400 vehicles per month, compared with a prior year average per month at 45 026.

The Motus Importer brands retail sales via dealerships had declined by 17 percent for the 10 months.

Management projections for new vehicle sales for calendar 2020 were between 355 000 and 375 000 vehicles, representing about a 30 percent decline, with growth projected at 420 000 to 440 000 vehicles in calendar 2021.