Combined Motor Holdings reported its fifth consecutive year of profit as consumers sought luxury imported models ahead of price increases.
Durban-based national motor retail company Combined Motor Holdings (CMH) reported its fifth consecutive year of profit as demand for luxury imported models grew ahead of 2002 price increases.
The Group achieved an increase in headline earnings of 21 per cent for the year ending in February.
“The dramatic decline in the value of the rand during December 2001 heralded an unexpected demand for vehicles, particularly the higher-priced imported models during January 2002, as customers sought to pre-empt the inevitable surge in prices,” said chief executive Jebb McIntosh.
While turnover rose by 29 per cent, the substantial growth in operating income was R83,2 million. Coupled with continued tight control over working capital assets, the group was able to generate a free cash flow from operations of R97 million, ending the year under review with cash resources of R123 million, up from R72 million in 2000.
“Particularly pleasing was the growth of the Group’s luxury market segment and the positive contribution by the car hire business during the second half of the period under review,” said McIntosh.
The growth in the luxury market segment is partially due to the R36 million acquisition of a BMW and Land Rover dealership in Menlyn, Pretoria in March 2001 and a good performance by the group’s Volvo outlets.
“Predictably, the car market has since declined to the extent that the first quarter sales of passenger vehicles were 6,7 per cent below those of 2001. However this reduction has been less marked in the luxury segment of the market than in the entry-level segment,” said McIntosh.
Particularly pleasing, said McIntosh, is the fact that National Alamo Car Rental, which the Group acquired two years ago, is becoming profitable. “The big challenge in entering this sector was the accomplishment of critical mass, which we have now attained with a five per cent market share, achieved via the establishment of the national chain.”