– By Caroline Falls –
Fleet management and salary packaging provider SG Fleet says it is in a strong position to win several big contracts and expand its services to government.
The Sydney-based group, which has operations in Australia, New Zealand and the UK, is upbeat after posting a better-than-expected first-half profit, telling investors that the pipeline of opportunities to expand its business is full and that the market is active.
The NSW State Government plans for outsourcing its fleet operations is expected to be announced before the end June. Several utility companies are also actively reviewing their fleet management and funding arrangements, SG Fleet said in a presentation to investors.
“A number of other large-scale opportunities are currently in market and we feel we are in a strong position to compete for these contracts,” SG FLeet CEO Robbie Blau said in a statement to the Australian Stock Exchange announcing the group’s profit.
The group posted a better-than-expected 10.1 percent increase in profit before tax of $29.1 million, excluding costs and contributions from its recently acquired nlc unit for the six months ended Dec. 31. The group’s revenue rose 9.3 percent to $93.3 million compared with the same period a year earlier. Earnings per share, excluding the acquisition costs, rose 16.6 percent to 9.57 cents. SG reported an increased margin of 25 percent, up from 23.3 percent in the previous corresponding period.
“Revenue and fleet growth has been achieved in the context of a mixed economic environment and intensified competition,” Blau said. “It is evidence of the strength of our competitive position and the success of our efficiency drive that we were able to do so while further enhancing our margins,” he added.
Some of the efficiencies include cuts in costs related to debt facilities and employment.
Other positives highlighted by SG Fleet in its report to the stock exchange include: government customer sign-up 1,000 drivers for driver safety training, a trend in the commercial sector towards full service leasing, a raft of uncontested contract renewals among financial services, food and logistics groups, and strong renewal rates for newly acquired nlc unit’s insurance products.
In New Zealand, SG Fleet said it’s continued to achieve successes at the top of the market after securing a contract with KiwiRail. In the UK, the business won its first 10,000-plus employee customer with the introduction of a salary sacrifice scheme.
SG Fleet announced a 10.5 percent increase in its first-half dividend to 5.223 cents per share fully franked, to be paid in April, compared with 4.725 cents a year earlier.
