Zeda (ZZD) H1 2026 earnings summary

Executive summary

• Revenue grew 3.2% year-over-year to ZAR 5.5 billion, driven by strong leasing (+7.5%) and car sales (+12.9%), despite a challenging rental segment and trading environment.

• Headline earnings per share increased 6.2% to ZAR 2.01, with a 45% increase in interim dividend to ZAR 0.80 per share, within the 30%-50% payout policy.

• Return on equity reached 21.2%, and return on invested capital (ROIC) was 12.3%, maintaining a 150 basis point spread over the weighted average cost of capital (WACC) of 10.8%.

• The business model emphasizes capital efficiency, risk management across operational phases, and diversified funding.

• Disciplined capital allocation and strategic expansion in leasing, used car retail, and funding diversification continued.

Financial highlights

• Operating profit was ZAR 841 million (margin 15%), slightly down year-over-year, with margin compression due to residual value and rental pressure.

• EBITDA declined to ZAR 1,658 million (margin 30%), impacted by margin compression and lower rental utilization.

• Net finance costs decreased by 8.9% year-over-year, with the effective interest rate dropping to 8.7%.

• Cash yield on fleet was 59.5%, outperforming industry peers.

• Free cash flow to firm at half-year was ZAR 194 million after ZAR 2.5 billion in vehicle replacements.

Outlook and guidance

• Management expects continued growth in leasing, subscription, and car sales, with a focus on operational efficiency and digital transformation.

• H2 outlook remains cautious due to rising oil prices, inflation, and flight disruptions, but tailwinds include new car price deflation and African growth.

• No change to the dividend policy is planned; growth in cash generation is anticipated.

• Second bond issuance planned for July, with ongoing diversification of funding sources.

• Further debt reduction and finance cost savings expected in the second half, with continued cost containment.