SURGING demand for electric vehicles has pushed new business writing in novated leases up significantly in the 2023 financial year with listed fleet company FleetPartners reporting a 47 per cent growth in the fourth quarter and a 53 per cent hike in September alone.
FleetPartners, previously Eclipx Group, announced in its FY23 financials that the introduction of the electric car discount in Australia during that year had stimulated demand for battery-electric vehicles (BEVs) and plug-in hybrid EVs (PHEVs).
The Australian government introduced FBT exemption for EVs in November 2022 which immediately pushed up the value proposition of EVs under a novated lease and allowed the motorist to pay for the lease out of pre-tax income.
This legislation impacted positively on all the novated lease players, including the listed companies such as McMillan Shakespeare Ltd, SG Fleet, Smartgroup and FleetPartners.
The uptake was even better received in FleetPartners’ other market, New Zealand, where demand for hybrids, PHEVs and BEVs has been stimulated by legislation supporting low and zero-emission vehicles “which has seen new business writing (NBW) for these types of vehicles grow 89 per cent compared with the previous financial year.”
NBW was up 13 per cent to $762 million compared with the previous financial year with the increase based on demand and the easing of constraints on new-vehicle supply.
Post-COVID factors such as the tightening of new-vehicle supply and delivery delays also affected the number of new vehicles sold which fell 13 per cent.
FleetPartners said that end of lease income (EOL) of $73.7 million was down 20 per cent compared to the previous year.
“EOL per vehicle was $7598, remaining elevated relative to pre-COVID-19 levels but down 8 per cent compared to the previous year,” it said.
FleetPartners said it is in “a strong position from a financial and strategic perspective, reinforced by the underlying strength of the FY23 result.”
“The financial position of the group, with no net debt (net cash: $22.6 million), provides balance sheet flexibility for capital management and future organic and inorganic opportunities as they emerge,” it said in its financial report to the Australian Securities Exchange (ASX).
It said net profit after tax, excluding amortisation, (NPATA) was $88.0 million, down 21 per cent on the previous year “driven predominantly by the normalisation of COVID-19 related tailwinds related to EOL and maintenance, and operating expenses.
Cash EPS of 33.3 cents per share was down 14 per cent, driven by the reduction in NPATA, partially offset by an 8 per cent decrease in average shares on issue as a result of the on-market share buy-back.
FleetPartners reported a total on-market share buy-back of up to $30 million, representing 65 per cent of the financial year’s second-half NPATA.
It started its on-market share buy-back program during FY21 and since that time, has returned a total of $166 million to shareholders and cancelled 72 million shares, representing a 23 per cent permanent reduction in share capital.
In its outlook, it said that NBW “is showing significant strength and order pipelines remain at record highs, which is expected to support continued asset and revenue growth in future periods as the supply chain continues to normalise.”