Wrap Text
Zeda Limited
(Incorporated in the Republic of South Africa)
Registration number: 2022/493042/06
JSE share code: ZZD
ISIN: ZAE000315768
('Zeda' or the 'Company' or the 'Group')
VOLUNTARY TRADING UPDATE FOR QUARTER ENDED 31 DECEMBER 2022
Highlights
' Revenue up 24% to R2 072 million
' EBITDA up 23% to R783 million with EBITDA margin sustained at 38%
' Billed days (rental days) up 10% to approximately 1.3 million
' Fleet size up 7% to 42 231 units
Statement from the Group Chief Executive Officer: Ramasela Ganda
Today we publish a resounding trading update for the quarter ended 31 December 2022 (the 'quarter').
We delivered Group revenue growth of 24% and EBITDA growth of 23%, underpinned by ongoing
solid execution of our key strategic priorities.
This is our first quarter as a listed Company , in which we have driven the strategy to unlock value. We
were well-positioned to continue our integrated mobility strategy, capitalising on the recovering
economic activity in both the car rental and leasing businesses.
Towards the end of 2022, the supply of vehicles started to ease up, and long outstanding orders were
delivered outside the cycle to our car rental operations. The increase in the rental fleet enabled us to
cater for the larger market in both domestic and inbound travel, which yielded higher billed days. This
culminated in the strong top line growth that we are reporting today. However, the out of cycle deliveries
impacted the average utilisation rate for the quarter of 70%.
Our leasing business is stable, and continues to be a steady source of annuity income. Our key focus
was on growing the corporate sector business, improving service and maintenance profits, in addition
to growing the uptake of value-added products.
Used vehicle sales performed well on a year-on-year comparison, with both retail and wholesale sales
recording growth. Margins remained stable despite the supply of new vehicles easing up, due to our
disposal channels being geared to fetch optimum margin yields. Demand was maintained despite rising
interest rates, inflation, and fuel hikes in the period under review.
I am pleased that we grew our business in a profitable and efficient manner. The cost containment
culture was evident with a sustained Group EBITDA margin of 38%. This was achieved despite
increased maintenance costs and additional corporate costs due to Zeda being a standalone listed entity.
In line with our strategic goal to optimise our balance sheet and generate cash, we recorded positive
cash from operations in the quarter. To date, we have commenced repaying the outstanding debt to
Barloworld Limited.
Business Overview
Car Rental Business (Avis Budget Rent a Car)
In the quarter the car rental business benefitted from several tailwinds across our operating markets.
The gradual return to normality post-pandemic, the steady increase in domestic and inbound
international travel and a marked improvement in vehicle supply from Original Equipment
Manufacturers ('OEMs') all had a positive impact on rental activity and demand.
The rental operations in South Africa delivered record revenue for the quarter, which is 37% higher
compared to the same quarter in the prior year and 3% higher than pre-pandemic levels. This is despite
rental activities still being 32% lower than pre-pandemic levels. Overall, revenue for the total car rental
business ' including the operations outside South Africa ('Greater Africa') grew by 34% to R1 518
million. Over and above the bounce back in inbound travel and corporate travel, revenues were
supported by a sustained demand for subscription offerings and the insurance business. This was
achieved on the back of a 11% increase in billed days for the quarter to 1.3 million.
Solid execution of the diversification strategy to ensure a balanced portfolio between discretionary
business (inbound and domestic travel) and contracted services (insurance business, corporate travel
and monthly subscription) continues to bear fruit, with the contracted services growing to 55% of the
revenue mix.
The growth trajectory in the profitability of the car rental business was sustained, surpassing
pre-pandemic levels in the quarter. EBITDA for the quarter grew 53% with the EBITDA margin
expanding from 27% to 31%.
Leasing business (Avis Fleet)
Avis Fleet has seen increased activity in the quarter, although the high inflationary environment persists.
The marked increase in demand is evident in the South African corporate segment, and our operations
in Greater Africa have also seen improvements in orders. This signals improved confidence in the
medium-term economic outlook as the replacement and growth of leased vehicles are a long-term
commitment.
While the constraints in the supply of new vehicles have eased compared to the quarter ended 31
December 2021, there are still pockets where availability of specific models remains an issue. The
impact of the longer lead times is evident in the increased maintenance costs, contract extensions and
the subsequent lower revenue for the sale of used vehicles.
Public sector contributed 4% of total leasing revenue in the quarter compared to 5% in the prior year,
due to the natural attrition of the contracts. Despite this, the strong performance in the corporate South
African segment and Greater Africa resulted in revenue of R631 million, which was flat compared to
the prior year.
EBITDA margin at 50% was sustained in the face of the increase in maintenance costs (consisting of
parts and labour). The used vehicle margins remain strong.
Strategy update
We are resolute in our strategy of deepening the adoption of the user-ship economy, delivering
integrated mobility solutions.
Strategic partnerships play a key role in driving the user-ship economy, which will enhance our ability
to make mobility easier, more accessible, and safer. This is a key driver to tap into the growth of our
businesses. We are exploring strategic partnerships to enable the business to respond to the evolving
mobility needs of customers.
We have embarked on a portfolio review process, which is aimed at ensuring that all our operations are
profitable and deliver returns above the weighted average cost of capital. We will implement various
mechanisms to address any under-performing operations as well as product and service segments.
Key to our strategy is retaining our strong BBBEE credentials, which is a licence to trade in South
Africa. This is one of our key strategic focus areas, with the intention to retain our BBBEE level 1 status
by addressing the impact of the unbundling on our ownership score.
We are committed to embedding sustainable Environmental, Social and Governance ('ESG') practices
by embarking on a strategy to reduce our environmental impact, enhance our corporate social impact
and apply sound corporate governance in the management of our business.
Outlook statement
We expect to sustain the Group performance into the first half of the financial year ending 30 September
2023 ('2023 FY') as the market continues to recover.
The revenue of the car rental business has surpassed pre-pandemic levels, even though the billed days
are at 68% of the same quarter in 2019. We see a growth opportunity for our business in improving
billed days. We expect the utilisation rate to improve to the targeted 73% - 75% for 2023 FY.
We will maintain our focus on growing the leasing business by continuing our efforts to tap into the
largely insourced fleet market and growing the corporate sector. We expect the leasing business to grow,
underpinned by a healthy order book, and a proactive approach to fleet management.
As the supply of new vehicles starts to ease and delivery becomes more consistent and reliable, we
expect the used vehicle sales performance to slow down towards the end of the first half of 2023 FY.
Notwithstanding the above, the tailwinds from the ongoing recovery in our high-yielding discretionary
business coupled with the growth in our contracted services will ensure that we maintain our growth
trajectory.
KPIs
Financial indicators ' Quarterly trends
2023 FY 2022 FY 2021 FY 2020 FY
R'000 Q1 Q1 Q1 Q1
December December December December
2022 2021 2020 2019
Revenue 2 072 1 676 1 981 2 483
EBITDA 783 637 467 640
EBITDA margin 38% 38% 24% 26%
Non-financial indicators ' annual trends
2023 FY 2022 FY 2021 FY 2020 FY
Q1 Q1 Q1 Q1
December December December December
2022 2021 2020 2019
Billed days (000) 1 285 1 163 1 173 1 898
Utilisation rate (%) 70% 79% 76% 74%
Fleet size (under 42 231 39 305 43 265 59 036
Finance)
Fleet size (under 197 672 199 384 221 873 237 935
Managed
Maintenance
Contracts)
Segmental reporting
Q1 FY2023
R'000 Car rental Leasing Corporate Consolidated
business business &
eliminations
Revenue 1 518 631 (77) 2 072
EBITDA 471 315 (3) 783
EBITDA margin 31% 50% - 38%
Q1 FY2022
R'000 Car rental Leasing Corporate Consolidated
business business &
eliminations
Revenue 1 130 634 (88) 1 676
EBITDA 308 329 - 637
EBITDA margin 27% 52% - 38%
The information contained in this voluntary trading update has not been reviewed or reported on by
Zeda's independent external auditors. All numbers, percentages, and year-on-year comparisons in this
trading update reflect the first quarter of 2023 FY compared to the first quarter of the prior year to 31
December 2021, unless otherwise stated.
Capital Markets Day
Shareholders are advised that Zeda will host its first Capital Markets Day on 13 March 2023, at 9:00
am. This hybrid event will be held in Sandton, Johannesburg and the live presentation will be
webcast.
The webcast link and the presentation will be available for all stakeholders on Zeda's website,
www.zeda.co.za.
For further details on how to attend and participate in the Capital Markets Day, please send an e-mail
request to investorrelations@zeda.co.za.
Thereafter the management team will participate in the Bank of America Global Research 24th South
Africa Conference 2023 in Sun City on 14 and 15 March 2023.
16 February 2023
Sponsor:
Nedbank Corporate and Investment Banking, a division of Nedbank Limited
Date: 16-02-2023 12:30:00
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