– By Caroline Falls –
SG Fleet, one of four Australian Stock Exchange listed fleet services companies, posted another double-digit growth in profit, citing growth in its new and old businesses. SG Fleet CEO Robbie Blau said he was actively seeking new bolt-ons to grow the business.
“We very much continue to explore further opportunities to add scale,” Blau said.
He also pointed to increased demand for telematics solutions as a key to the group’s positive outlook.
The company said its net profit after tax rose 35 percent to $26.6 million in the six months ended 31 December 2016 from the same period a year earlier. The bottom line when new businesses are excluded was $29 million, a rise of 27.2 percent from a year earlier.
Core Australian business units benefited from conversion of customers to fully maintained operating leases, increasing adoption of telematics and supply of additional services to existing government clients in NSW and Qld.
Noteworthy was the contribution from its new UK businesses — Motiva and Fleet Hire. They brought in near 10 percent, or $13.2 million, of the group’s revenue ($133.6 million) in the six-month period.
“Fleet Hire and Motiva made an immediate contribution during the period,” SG Fleet CEO Robbie Blau said in a statement on the day of the results release. He said the acquisitions had given SG an expanded offering and a larger book of customers as well as opportunities to benefit from synergies.
“The impact of these will start to play out in the current period,” he said, adding, “This clearly allows us to build further on what has been our first profit period in this market.” He said both UK units benefited from the UK government standing by recently introduced changes to emissions standards in its car salary sacrifice structure.
Blau also highlighted brisk business in New Zealand, saying the company continued to sign up new customers and expand the range of products and services sold to existing customers. “Supported by strong corporate and consumer sentiment, business activity in this market has been buoyant,” Blau said. “New Zealand again raised the profit contribution … and we expect to maintain that progress,” he said.”
Earnings per share rose 31.3 percent to 12.57 cents per share in the first half. The company declared a fully franked interim dividend of 7.536 cents per share, up 44.3 percent from the same period a year earlier.
SG Fleet boosted its estimate for forecast full-year earnings growth to 22-27 percent from earlier guidance of 20-25 percent.
This outlook comes despite some headwinds in its major market Australia. The company cited weak retail conditions, major domestic and international uncertainties, aggressive tender pricing, including what it called “unsustainable behaviour from certain competitiors” and pressure on margins as dampening its growth outlook.
