Transaction Capital FY HEPS up 28%

Capital solutions company Transaction Capital has reported a remarkable 28% growth in earnings per share for the full year ending in March, marking a return to pre-pandemic levels. The company's CEO, David Hurwitzer, attributed this success to several key drivers within the business divisions. Hurwitz highlighted the outstanding performance of the WeBuyCars business, which saw a staggering 58% increase in earnings. Transaction Capital consolidated a greater component of these earnings, growing from just under 50% to nearly 75%. The company's risk services business also excelled, with a 25% growth in earnings. By leveraging their South African infrastructure, Transaction Capital extended its services to customer bases in Australia and the UK, focusing on customer services and debt collection. However, the SA Taxi business witnessed a slight contraction of 4%. Despite improvements in operational metrics such as loans and insurance policies originated, the industry's profitability remains under pressure due to factors like reduced commuter movement post-COVID and lower fuel prices. Overall, the strong performance of WeBuyCars and risk services offset the challenges faced by the SA Taxi division, resulting in stellar results for Transaction Capital. WeBuyCars, notably described as exceptional by Hurwitz, is strategically positioned to benefit from the structural shift in South Africa's commuter population. With a growing number of individuals transitioning from public transport to vehicle ownership, WeBuyCars capitalizes on the demand for second-hand cars. Unlike competitors focusing on newer vehicles, WeBuyCars caters to a wide spectrum, from one-year-old cars to two-decade-old vehicles. The expansion of physical dealership locations and e-commerce platforms, increased financial products uptake, and brand investments have further boosted the business's market share and customer service. Hurwitz emphasized that rising interest rates could impact discretionary income and affordability constraints. However, he expressed confidence in the resilience of Transaction Capital's businesses, which have demonstrated their ability to navigate economic cycles. The SA Taxi industry, essential for daily commuter transportation, remains largely resilient to external factors like fuel prices and interest rates due to non-discretionary spending on transportation. Despite potential challenges, Transaction Capital is poised to withstand moderate interest rate increases, with a keen eye on market dynamics. In conclusion, Transaction Capital's stellar financial performance for the full year underscores the company's robust business strategies and ability to adapt to evolving market conditions. With a strong focus on diversification, customer service, and market expansion, the company is well-positioned for continued growth and success in the future.