Zeda Limited has released its reviewed interim results for the six months ending March 31, 2024. Despite a challenging economic environment, Zeda demonstrated strong topline growth, solid returns to shareholders, and a robust financial position. This article delves into the company’s performance, highlighting key financial metrics and strategic initiatives that have driven Zeda’s success.
Financial Performance Overview
Zeda Limited reported a significant increase in revenue, achieving 19.0% growth to R5,270 million. This robust growth was underpinned by effective strategy execution and a healthy mix of product offerings across its rental and leasing businesses.
| Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Revenue (R’million) | 5,270 | 4,430 | 19.0% |
| EBITDA (R’million) | 1,796 | 1,671 | 7.5% |
| EBITDA Margin (%) | 34 | 38 | (10.5%) |
| Operating Profit (R’million) | 789 | 803 | (1.7%) |
| EPS (cents) | 165.4 | 196.5 | (15.8%) |
| HEPS (cents) | 165.5 | 189.1 | (12.5%) |
| Net Debt to EBITDA (x) | 1.5 | 1.6 | 6.3% |
| ROE (%) | 28.5 | 28.3 | 0.7% |
Revenue Growth Driven by Strategy Execution
Zeda’s revenue growth of 19.0% to R5,270 million was driven by increased demand in the domestic market and inbound tourism. The company’s short-term rental business, which includes Avis and Budget, saw a 19.6% increase in revenue to R3,930 million. This growth was supported by a strong retail marketing focus and increased used car sales volumes.
Leasing Business Performance
The leasing business, Avis Fleet, reported a substantial 17.0% increase in revenue to R1,339 million. This performance was driven by a strategic focus on growing the heavy commercial fleet and increasing penetration within the corporate and Greater Africa markets.
| Metric | 2024 | 2023 | % Change |
|---|---|---|---|
| Leasing Revenue (R’million) | 1,339 | 1,144 | 17.0% |
| Leasing EBITDA (R’million) | 783 | 659 | 19.0% |
| EBITDA Margin (%) | 59 | 57 | 3.5% |
The Greater Africa business contributed 22% to total revenue, with notable performances in Zambia, Botswana, Mozambique, and Namibia. EBITDA for the leasing segment grew by 19% to R783 million, with an improved EBITDA margin of 59%.
Challenges in the Used Car Market
Despite the overall strong performance, Zeda faced challenges in the used car market. The normalization of used car prices and an excess supply of new vehicles led to heavy discounts, impacting profitability. This resulted in a decline in EBITDA for the rental business to R1,013 million, with a contraction in the EBITDA margin to 26%.
Solid Financial Position and Cash Generation
Zeda maintained a strong financial position with net debt of R5,188 million and a net debt to EBITDA ratio of 1.5x, an improvement from 1.6x in March 2023. The company’s robust cash generation allowed for a cash dividend of 50 cents per share, the first since listing on the JSE.
| Metric | 2024 | 2023 |
|---|---|---|
| Net Debt (R’million) | 5,188 | 5,363 |
| Cash Position (R’million) | 958 | 765 |
Strategic Focus on Integrated Mobility
Zeda’s integrated mobility strategy has been pivotal in maintaining its growth trajectory. The company continues to innovate, driving the adoption of the usership economy with products like iLease. Despite initial lower conversion rates, Zeda remains optimistic about the future of usership over ownership.
Greater Africa and Technology Innovation
Greater Africa remains a key growth pillar, with positive results from the portfolio review conducted in the prior year. The introduction of technology-driven solutions, such as the Rental Reservation and Key Locker, has enhanced customer experience and operational efficiency.
Outlook and Strategic Priorities
Zeda is optimistic about its future prospects, focusing on long-term growth pillars such as international customers, heavy commercial leasing, and van rentals. The company expects the used car market to normalize and anticipates potential interest rate declines, which would improve consumer disposable income and reduce finance costs.
Management has implemented cost optimization measures to enhance profitability and protect operating margins. Zeda also plans to explore the Debt Capital Market through a JSE-Registered Domestic Medium Term Note, following its recent Moody’s investment credit rating.
Conclusion
Zeda Limited’s interim results for the six months ending March 31, 2024, reflect the company’s resilience and effective strategy execution. Despite challenges in the used car market and a tough economic environment, Zeda achieved significant revenue growth, maintained a strong financial position, and delivered solid returns to shareholders. With a continued focus on integrated mobility and innovation, Zeda is well-positioned to drive future growth and maintain its leadership in the mobility solutions market.