– By Caroline Falls –
Smartgroup Corp., a listed fleet management, novated leasing and employee management services group, posted declines in revenue and profit for the full year ended Dec 31, citing the challenging economic conditions brought in by COVID for the drops, particularly on its novated leasing business.
Profit after tax fell 20 percent to $65.2 million for the year, and revenue fell 13% to $216.3 million, compared with the year earlier. The results were in line with guidance provided by the company earlier in the year.
“As the pandemic took effect, we moved quickly to focus on providing high quality service to our customers remotely and implementing cost containment measures,” said CEO Tim Looi, in a statement to the Australian Stock Exchange, adding, “This, combined with our simplification program, resulted in a good operational and financial performance for the year.”
On the bright side, Smartgroup declared a final dividend of 17.5 cents a share and a special dividend of 14.5 cents.
Smartgroup brands include smartleasing, smartfleet, and Autopia.
The company manages 360,500 packages, with organic growth of some 1,500 packages in 2020. Smartgroup had a 100% success rate renewing or extending all of its top 20 contracts that were up for renewal during the year. A similar number of contracts are up for renewal in 2021.
Smartgroup reported novated leases under management fell 3% to 66,700 compared with the year earlier. The number of fleet vehicles under management increased 4 percent to 24,900 on the year earlier.
A 14% decline in novated lease volumes was the key driver of lower revenue in 2020. In addition, yields fell 6%, resulting from both a shift towards customers refinancing their existing vehicles, rather than leasing new vehicles, and the previously announced insurance partner re-pricing effective 1 July 2020, Smartgroup reported.
Looi said the group is off to a good start in 2021. “We are scheduled to onboard another health client with approximately 8,000 packages in Q2 2021. Further, novated leasing leads and the mix of new leases versus refinanced leases are both improving. Smartgroup operated much of 2020 with reduced client on-site activities, traditionally a strong channel that generates interest and demand for our services. We are cautiously optimistic that client on-site activities will increase through 2021.”
In addition, he said that novated leasing leads were 15% higher in January 2021 than their monthly average during the second half of 2020.
“For the next 12 months, we will be focused on enhancing customer experience to build loyalty, as well as improving our digital capabilities to reduce our cost to serve,” Smartgroup said in its profit report. “Our simplification program continues to remove complexity across our business. Our customer focused culture and longstanding relationships underpin our high client retention rate and position us well for future success.”
