Transaction Capital has plans in place for the recovery of SA Taxi, the one out of the group’s three divisions that underperformed in the past financial year, SA Taxi CEO Terry Kier said in the groups’ integrated annual report released yesterday.
The group’s WeBuyCars business did particularly well and contributed R540 million to core earnings attributable to the group in the year to September 30, 2022, 100% above the 2021 figure. Nutun, the digital business services company, contributed R409m to attributable group core earnings after increasing by 28% over the year.
But SA Taxi, which mainly finances new and used minibus taxis, saw its contribution to core attributable earnings fall 26% to R304m.
Kier said the floods in KwaZulu-Natal in April, 2022 temporarily disrupted public transport services and damaged Toyota’s manufacturing plant, resulting in its closure for the latter half of SA Taxis’ financial year.
“Although the production of Toyota minibus taxis has resumed, supply of new minibus taxis to the market remains significantly constrained. In the second half of the 2022 financial year, this impacted our ability to originate new loans and grow gross loans and advances,” he said.
Retail prices for minibus taxis have also continued to rise, with an average increase of 6.5% in the past year as did fuel prices, while commuter travel overall had not yet recovered to pre-pandemic levels.
“The combination of these factors has placed the minibus taxi industry’s profitability under strain, exerting pressure on taxi operators’ ability to afford their finance instalments and insurance premiums. In response to this, the industry passed the first fare increase since the start of the pandemic period in July, 2022. Although this provided some relief, it has been insufficient to entirely offset the financial pressure brought about by the environment,” Kier said.
He said SA Taxi was implementing initiatives to address minibus taxi operator affordability, including a debt rehabilitation programme and the option to access product amendments such as extending the term of their loans, effectively reducing instalments.
Kier said business operations had been assessed in the past year, “tough decisions” were taken to realise efficiencies and these were expected to yield returns “as the business makes its way to recovery over the next year”.
Transaction Capital chief financial officer Sean Doherty said in the integrated report that the group in 2022 had extended its track record of mid-teen organic earnings per share growth, with core earnings up 24% to R1.25 billion and attributable core earnings per share higher by 17% to 172.5 cents.
WeBuyCars’s strong performance was driven by a 43% increase in the number of vehicles it sold in the year to 125 812 units, while it bought 130 177 vehicles – 42% more than the year before.
Although not strictly comparable, but as an indication of how well WeBuyCars performed, National Association of Automobile Manufacturers of South Africa data shows that new vehicle sales for the year to December 31, 2022 increased by 13.88% to 528 963 units.
Transaction Capital’s share price was untraded at R34.17 yesterday morning, 26% lower than the R46.35 it traded at the same time last year.
BUSINESS REPORT