[TOP STORY] Sturdy FY outcomes from CMH, regardless of challenges

SIMON BROWN: I’m chatting now with Jebb McIntosh, CEO of Combined Motor Holdings (CMH). Disclaimer: I maintain shares in CMH. Results out for the year-end to February: dividend up 135%, headline earnings per share up 117%, money up 8% at R817 million. It’s about 40% of market cap.

Jebb, I respect the time this morning. Before the outcomes, I simply need to contact on the Durban floods, which in fact had been publish the interval that you simply’re reporting on, the impression of that. Toyota manufacturing is true there, down at Prospecton, the place we noticed visuals of freeways beneath water. Of course the Durban port, the place a whole lot of automobiles are going by means of [was affected too]. What is the impression on what’s, I think about, a nonetheless tight provide chain for motor automobiles?

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JEBB McINTOSH: Morning, Simon. You’re one hundred percent proper. We imagine that the Toyota manufacturing facility will likely be closed for about 12 weeks whereas they clear up the mud and type out electronics and so forth. One of our branches was fully flooded within the Bluff space, but it surely’s again in enterprise already, in order that’s a optimistic. But, as you mentioned, the logistics concern has been a serious one throughout the previous 12 months and I feel the closure of the port and so forth actually gained’t assist these [issues].

SIMON BROWN: And the logistics? I’ve been chatting with you and different CEOs in allied industries and [other] industries, and we carry on pondering that the chip situation goes to resolve within the subsequent six to 12 months, and it simply retains on taking place the street. I noticed Intel saying that they’re truly anticipating it to stay in place in 2024. Inventory ranges stay tight. Is that also seeing a chance maybe for higher margins, but additionally folks shifting to beforehand owned [vehicles]?

JEBB McINTOSH: Simon, the primary a part of the query: it does appear to only be persevering with, and I feel one of many issues is that a lot of the producers are utilizing, let’s name them, old-level chips, and the brand new factories are constructing on new-level chips. Without redesigning their motor vehicles fully, they gained’t have the ability to use the brand new chips. So I feel this downside’s going to proceed for a while.

…Pre-owned vehicles can also be problematic, whereas [with] restricted new-car gross sales you’re getting [fewer] used vehicles coming onto the market, and in lots of circumstances they’re actually too previous to be referred to as ‘pre-owned’. The mileage is simply too excessive. So pre-owned vehicles are additionally very quick within the market.

The car-hiring business has additionally been battling to get ample vehicles, so that they aren’t depleting. So all in all there’s a scarcity each of latest and used motor vehicles.

SIMON BROWN: To these outcomes, report headline earnings per share, working margin at 5.4%. As far again as I may examine yesterday night, that’s a report quantity as properly. This is, I suppose, not a base impact as a result of these are report ranges. How a lot of it’s that Combined Motor Holdings has in lots of senses maybe come out of the pandemic a stronger and higher enterprise than it went into the pandemic?

JEBB McINTOSH: Look, Simon, I feel we’re a stronger and higher enterprise. We took some very robust choices throughout the pandemic, particularly within the early phases, and I feel these have paid off. But extra to the purpose, we’ve managed to multi-franchise a lot of our operations. Over the previous three years we’ve added 22 operations into our current infrastructure with out including any additional branches or mounted property, and we’re busy putting in one other six operations whereas we sit right here. That spreading of prices has made a serious distinction. It’s additionally helped us tremendously with the scarcity of inventory and varied of the extra in style manufacturers, we could name them, which has helped to stability out. The provide from India and China has been a bit extra common than European provide, ought to I say.

SIMON BROWN: Car rental – you touched on that. First Car Rental is your model in that area; a really sturdy interval from that. And throughout the pandemic you didn’t, I suppose, knee-jerk panic and de-fleet. That’s left you in a really sturdy place now as individuals are beginning to lease automobiles once more, and also you’ve received first rate ranges of inventory to lease out.

JEBB McINTOSH: Yes, our inventory ranges are increased than pre-pandemic. But the entire market seems to be at about 66% of what [it was] beforehand, so we positively have picked up market share throughout the interval.

SIMON BROWN: We’ll depart that there. That’s Jebb McIntosh, the CEO of Combined Motor Holdings, speaking outcomes for the 12 months ending February [2022].

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