JSE-listed mobility and vehicle leasing company Zeda, for the half-year to March 31, reported 1.6% lower revenue of R5.18-billion compared with R5.27-billion for the half-year period to end March 2024.

However, the company increased gross profit by 4.6% to R2.24-billion, and the gross profit margin improved by 200 basis points to 43% despite lower revenue, said Zeda Group CEO Ramasela Ganda.

Operating profit increased by 5.4% and the operating profit margin improved by 100 basis points to 16%.

The company also maintained its earnings before interest, taxes, depreciation and amortisation (Ebitda) margin at 34% despite an Ebitda decline of 3.1%.

Additionally, Zeda reported an 11.1% increase in basic earnings a share to 183.7c and an 11.2% increase in headline earnings a share to 184.1c.

The company also declared a 55c-a-share dividend, which is 10% higher year-on-year.

Further, the company achieved a 6% reduction in Scope 2 emissions. It continues its transition to renewable energy, with solar and backup energy systems installed at five facilities, Ganda said on May 27.

“Despite a challenging trading environment that impacted top-line revenue, our interim performance reflects the strength and resilience of our diversified business model.

“Traditional car rental and vehicle sales faced mounting pressure during the period, but our leasing, subscription and Greater Africa strategies delivered earnings growth, improved margins and enabled us to continue to invest for the long term,” she said.

The company navigated the complex global and domestic landscapes and posted double-digit earnings growth.

“However, global trade tensions remain. In our case, the automotive value chain and our customers operating in agriculture face uncertain times.”

Meanwhile, in its rental segment, its digital dealership recorded revenue 5% better than its plan, and the company has enhanced its short-term monthly subscription with notable financial results.

Subscription served as a key driver of the “usership” economy and had helped the company to enhance the yield potential of its assets, said Ganda during the company's results presentation.

“The growth is attributable to the investments we made in technology that has streamlined the booking process. We are in the process of implementing similar solutions as part of our long-term mobility strategy, and we believe these investments will generate similar outcomes,” she said.

In line with this, there is an enhanced data management proposal underway to gain better insights into customer behaviour, as well as other enhancements of customer channels to move towards a customer-centric model, which is also the focus of its organisational redesign.

The board had approved, and endorsed as a key strategic shift, the adoption of technology as a digital core to the business, Ganda noted.

Meanwhile, the company's net debt increased to R6.39-billion to support fleet growth during the period, up from R5.18-billion at the end of March 2024, said Zeda Group FD Thobeka Ntshiza.

The consequence of the timing of the fleet investment in the second quarter of the financial year was that limited Ebitda was generated in the period, which inflated the net debt to Ebitda ratio to 1.9-times, up from 1.5-times in the 2024 first half reporting period.

“We expect the ratio to normalise in the second half [of the financial year],” she said.

In terms of focus for the remainder of the financial year, Zeda would focus on discipline to generate cash and continuously work on working capital.

The company would also continue with its cost-containment culture and driving operational excellence. Managing adverse impacts on revenue by protecting margins would depend on how the company delivered that revenue, Ntshiza said.

The company would also improve technological platforms to enhance insights, decision-making and finance support of Zeda, she added.

The trading environment was expected to remain challenging, Ganda said.

“With the headwinds in the key focus regions, we will prioritise efficiencies to contain our operating costs below inflation. We are also implementing a multi-year efficiency programme that aligns with our portfolio review to enhance the performance of our services and improve branch profitability,” she said.

“We also remain committed to divesting from our Ghana investment by the end of the calendar year and redirecting our resources to other portfolios. We aim to have the Ghana business as discontinued operations by the end of the financial year.

“We remain focused on disciplined execution, expanding into higher-growth segments like commercial and subscription, and managing risks proactively,” she said.