Zeda withholds dividend despite higher interim profit
Car rental and leasing group Zeda, which owns the Avis and Budget brands, refrained from paying out an interim dividend despite stronger results as car rentals remained at a fraction of pre-pandemic levels.
“Due to the number of headwinds in the car rental business, the total car rental activities now operate at 26.8% of the pre-pandemic levels with inbound still lagging at just below half of the pre-pandemic levels,” the company, valued at R1.9bn on the JSE, said in its results for the six months to endMarch.
The car rental segment, which generated 51.7% of net profit, benefited from diversifying its offerings, including subscriptions, as sales from inbound and corporate business travel surged year on year.
“In addition to inbound, an expected increase in international airlines’ activities using chauffeur-driven vehicles presents us with an opportunity to continue to grow the business further in absolute terms,” the company said.
Prospects for the hospitality industry have brightened off a low base since the end of the worldwide restrictions to fight the Covid-19 pandemic, but the tough current economic environment amid high inflation and interest rate hikes have weighed on consumers’ disposable income.
Established in 1967, Zeda offers car rental and chauffeur services as well as luxury and van rental.
With headquarters in Johannesburg, the company now operates in 10 African countries after unbundling from diversified industrial group Barloworld and listing on the JSE in December last year.
Profit for the period improved one-fifth year on year to R376.67m and headline earnings per share rose 3.7% to 189.1c.
Gross profit (revenue minus the cost of sales) increased just more than a quarter to R2.06bn.
Operating profit, generated from a company’s core operations, also rose by a similar margin to R803.2m, while core earnings (Ebitda) was up almost one-fifth at R1.67bn.
“We have again proven our ability to not only survive but to be profitable under difficult trading conditions.
“Over the next 18 to 24 months, we will continue to focus on optimising our businesses, capital allocation and balance sheet to realise cost saving while growing into promising new verticals,” group CEO Ramasela Ganda said. —