Motus (JSE: MTH) lifts profit 19% as finance costs fall R369m and dividend rises 29%

Motus Holdings Limited (JSE: MTH) reported FY26 revenue of R113.55 billion, up 1%, while operating profit increased 4% to R5.714 billion. Profit before tax rose much faster, increasing 20% to R4.005 billion, while attributable profit climbed 19% to R2.984 billion.

Headline earnings per share increased 15% to 1,777 cents and basic EPS rose 19% to 1,753 cents. The board increased the total dividend by 29% to 710 cents per share, including a final dividend of 410 cents.

The most important driver beneath the income statement was finance expense. Net finance costs declined 19% to R1.539 billion from R1.908 billion, a reduction of R369 million. That saving is equivalent to almost 12.4% of FY26 attributable profit and explains why bottom-line earnings expanded much faster than revenue.

How did Motus turn 1% revenue growth into a 19% increase in attributable profit?

Operating profit increased only R238 million, from R5.476 billion to R5.714 billion. Net finance costs, however, declined by R369 million, creating additional earnings leverage below the operating-profit line.

The result demonstrates the value of reducing funding costs in an automotive business that carries substantial working capital and vehicle-related financing requirements.

Motus also said adjusted revenue, excluding the prior-year disposal of Motor Truck & Van, increased around 3%, providing a somewhat stronger measure of underlying top-line movement than the reported 1%.

Even so, FY26 is not primarily a high-revenue-growth story. It is a balance-sheet and returns story.

Why does the decline in finance costs matter so much for an automotive group?

Motus operates dealerships, vehicle import and distribution, rental businesses and aftermarket services across multiple countries. Much of that activity requires inventory financing because vehicles need to be purchased or held before final customer payment.

Higher interest rates therefore affect Motus more directly than businesses requiring little working capital.

A R369 million reduction in annual net finance costs allows a substantially larger portion of operating profit to reach shareholders.

It can also make previously marginal inventory or expansion decisions more economically attractive because the hurdle created by funding costs becomes lower.

Is Motus now generating returns comfortably above its cost of capital?

Return on invested capital increased to 12.6% from 10.9%, and Motus said this exceeded weighted average cost of capital by approximately three percentage points. Return on equity increased to 15% from 13.1%.

This spread matters because growth only creates shareholder value when returns on new capital exceed the cost of funding it.

An automotive distributor can produce enormous revenue while earning weak economic returns if inventory, dealerships and acquisition capital generate only marginal profitability.

Motus’ FY26 result shows improvement in that relationship. Revenue barely moved, but returns on both invested capital and equity strengthened.

That is arguably higher-quality progress than simply adding several billion rand of lower-margin vehicle sales.

Why did Motus increase the dividend by 29%?

Cash generated from operations increased 6% to R7.99 billion, giving the board greater capacity to return capital.

The 710-cent full-year distribution against HEPS of 1,777 cents implies a payout of roughly 40% of headline earnings.

That leaves a majority of earnings within the business for working capital, debt management and investment while still delivering a substantial increase in shareholder distributions.

The dividend increase therefore looks supported by earnings and operating cash rather than requiring an unusually aggressive payout.

What could pressure Motus earnings in FY27?

Vehicle markets remain cyclical. Consumer affordability, interest rates, currencies and manufacturer pricing can all affect demand.

Motus also has geographic exposure beyond South Africa, including the United Kingdom, Australia, Asia and other African markets.

That diversification can stabilise earnings, but it also introduces currency and regional demand risk.

The largest question is whether finance-cost relief can continue. FY26 received a meaningful benefit from lower net financing costs, so another 19% reduction should not be assumed automatically.

If operating profit grows faster next year, Motus will need to generate that improvement through vehicle volumes, margins, aftermarket services or acquisitions rather than relying predominantly on lower funding expense.

FY26 nevertheless represents a strong quality-of-earnings year. Motus produced only 1% reported revenue growth but increased HEPS 15%, attributable profit 19% and the annual dividend 29% while moving returns further above the cost of capital.