Transaction Capital, the largest taxi financier in South Africa, saw its shares plummet 40% on Tuesday. This event followed a warning to shareholders that it expected interim earnings to drop by over 20%.
The company, which also owns a majority stake in vehicle trader WeBuyCars, said it would need to “reset” financier SA Taxi due to structural headwinds caused by the COVID-19 pandemic. As reported by News24, these headwinds include vehicle price increases, persistently low commuter volumes, elevated fuel prices, sharp interest rate hikes, and the lack of corresponding fare increases, which have all contributed to the industry’s profitability remaining stressed.
In addition, Eskom’s load shedding has adversely impacted economic activity, with a negative knock-on effect on commuter activity. Although the company acknowledged some margin pressure at WeBuyCars, it continued to gain market share.
Despite the impact on half-year results, the company’s CEO remains confident in its ability to recover and grow, saying, “We are proud of our track record of delivering consistently high growth for stakeholders and believe that Transaction Capital will continue to deliver this into the medium term.”
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