WeBuyCars predicts a 21%-26% increase in annual core headline earnings

People walk past a second-hand vehicle trader WeBuyCars Buying Pod in Cape Town. Picture: REUTERS/Esa Alexander

People walk past a second-hand vehicle trader WeBuyCars Buying Pod in Cape Town. Picture: REUTERS/Esa Alexander

Published 13h ago

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WeBuyCars Holdings, a leading player in South Africa’s used-vehicle market, has released its financial projections for the year ending September 31 and the company expects a substantial increase in its core financial performance, despite facing some one-off costs and accounting adjustments.

Core headline earnings, which the group uses to measure and benchmark business performance, are projected to rise between 21% and 26%, reaching between R798 million and R832m.

This metric represents headline earnings adjusted for certain non-recurring or non-cash items, providing a clearer picture of the company’s underlying performance.

On a per-share basis, core headline earnings are expected to increase between 7% and 12%, amounting to between 212.5 cents and 222.4 cents per share.

However, headline earnings per share (HEPS) are anticipated to decline between 60% and 65%, falling to between 85.6 cents and 97.8 cents compared with 245.1 cents last year.

This decrease is primarily due to non-core, one-off transaction costs and non-cash call option derivative accounting adjustments.

The company's basic earnings per share and headline earnings per share were impacted by two main factors.

Once-off professional, legal and JSE listing fees amounted to R45m with the listing on the JSE’s Main Board.

The group held call options that gave it the right to purchase the 25.1% shareholding in the group from I VDW Holdings. A call option derivative asset was raised in prior periods for these options.

Upon adoption of the new Memorandum of Incorporation on March 25, 2024, the shareholders' agreement was cancelled, which led to the cancellation of the call options. Consequently, the call option derivative asset of R426.5m was derecognised on March 25, 2024.

WeBuyCars Holdings is expected to publish its financial results for the year on or about November 18, 2024, which will provide a more comprehensive view of the company’s financial position in the competitive South African automotive industry.

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