Eclipx Group has reported it’s FY22 half year results with a warning to investors that the strong earnings from End of Lease (EOL) income will not continue once new car supply levels normalise.
EOL profit has continued to increase each reporting period with the 1H22 reaching $8,813 per vehicle, with increased volume, compared to $5,944 1H21. The profit used vehicles is 87% of the EOL income per unit compared to 40% in a normal operating environment.
The result is driven by the strong used car market which continues to defy previous records because of the limited supply of new vehicles globally, and a string of natural disasters locally that have destroyed cars.
There has also been increases in maintenance margin and management fees which could be linked to the extension of leases while waiting for new car deliveries.
Eclipx reported significant progress in the Strategic Pathways plan which was initiated 18 months ago. The strategy is designed to expand into new and existing target markets of Corporate, Small Fleets (formerly called SME) and Novated leasing.
To grow the novated lease business, Eclipx has increased marketing activities and focused on digital education programs to make eligible employees aware of the significant savings available from salary packaging. In the results presentation it was estimated that Eclipx has access to approximately 900,000 employees but only has 2% penetration.
In the Corporate market, Eclipx will use a content based marketing strategy combined with traditional account management that will be enhanced with a CRM and improved sales disciplines.
A key figure in the announcement was the significant order pipelines across the businesses in Australia and New Zealand. The novated lease order pipeline is 3.7 times bigger than pre-COVID levels and the Corporate pipeline is 2.2 time larger. In New Zealand the order pipeline is almost five times the levels experienced before the pandemic. The large pipeline creates future revenue opportunities that should keep investors and management happy.
Eclipx Fleet Size
Novated Lease – 14,700
Fleet Australia – 53,500
Fleet NZ – 24,400
Total – 92,600