Transaction Capital full-year HEPS plunge 144%
Joining CNBC Africa to unpack these results further is Jonathan Jawno, CEO, Transaction Capital.
Tue, 05 Dec 2023 16:12:42 GMT
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AI Generated Summary
- The adverse impact of economic factors on the South African taxi industry has led to significant challenges for Transaction Capital, resulting in a headline loss of 144% driven by increased repossessed vehicle stock write-downs in SA Taxi.
- Transaction Capital is considering listing We Buy Cars separately, with a vision to focus on stabilizing SA Taxi and capitalizing on the growth potential of Newton in the BPO space.
- WeBuyCars, a dominant player in the South African used vehicle market, has shown resilience and innovation despite a slight decline in earnings, signaling positive momentum for the future.
Transaction Capital, the group that holds significant stakes in We Buy Cars, SA Taxi, and Newton, recently reported a headline loss of 144%. The losses in SA Taxi were primarily driven by a substantial increase in repossessed vehicle stock write-downs. Jonathan Jawno, the CEO of Transaction Capital, joined CNBC Africa to delve deeper into these results.
Jawno shed light on the challenging operating environment, especially within SA Taxi. He explained that the taxi industry has faced significant economic challenges over the past three years due to various factors such as rising petrol prices, interest rates, and vehicle costs. The inability of taxi operators to pass these increases onto commuters has led to a dramatic deterioration in their economics. As a key funder of the industry, Transaction Capital has had to take significant measures to navigate these challenges. They have downscaled the business and shifted focus to second-hand vehicles to align with the market's new dynamics.
Moreover, Jawno discussed the potential listing of WeBuyCars separately. If the decision goes through, Transaction Capital's future would involve owning SA Taxi and Newton. SA Taxi is expected to undergo a period of stabilization and consolidation, while Newton, a high-growth business in the BPO space, is poised for expansion.
On the performance of WeBuyCars, Jawno highlighted the dominance of the used vehicle market in South Africa, given the challenges in the new vehicle segment. WeBuyCars, with its emphasis on honesty and transparency, has emerged as a market leader with 145,000 cars sold this year. The company's substantial investment in technology has further bolstered its success. Despite a slight decline in earnings compared to an exceptionally strong previous year, WeBuyCars has exhibited positive operating metrics, positioning it well for continued success.
While Jawno hinted at the possibility of listing WeBuyCars to unlock value for shareholders, he emphasized that no final decision has been made. The ongoing discussions with the founders will shape the future direction of this initiative. Transaction Capital remains focused on creating value for its stakeholders amidst the evolving market dynamics.
In conclusion, Transaction Capital's journey amid the challenging landscape of the South African taxi and vehicle market underscores the resilience and adaptability required in the face of economic shifts. With a strategic focus on restructuring, innovation, and value creation, the company aims to navigate these challenges and emerge stronger in the long run.
