The company says that used-car prices have been so buoyant it saw a massive increase in end-of-lease revenue of some 246 per cent, or $31.2 million.
In what it calls a “challenging” environment, SG Fleet reported a net profit of $43.7 million, up 20.1 per cent on the previous year. Revenue was up 15 per cent to $198.2 million.
The company rewarded shareholders with a 12.585 cent a share dividend for the year, a rise of 25.9 per cent on the 2020 fiscal year.
In its financial report, SG Fleet – which operates in Australia, New Zealand and the UK – said “the used car market is currently experiencing a once-in-a-generation event due to a lack of new car supply and an exodus from public transport”.
CEO Robbie Blau said: “It is such a strong market that industry stalwarts are astounded at the prices being paid.”
He also said the value of used vehicles remained “at exceptional levels in all three countries, boosting our end of lease income”.
“As a consequence of the delivery challenges we faced, the order pipeline at year-end almost doubled on the previous year, which means a significant number of orders will spill into the current financial year,” he said.
The company said it benefited with an increase in ‘end of lease’ revenue of 246 per cent (or $31.2 million) and this income “had such a major impact on the results that SG Fleet noted that it materially shifted the proportion of net revenue from 11 per cent in FY20 to 27 per cent in FY21.
In its report to the Australian Securities Exchange (ASX), SG Fleet said that fleet utilisation had also declined. It reported a decrease in maintenance expense of 9.2 per cent “due to vehicles travelling fewer kilometres”.
“This benefit will flow onto future years because corporate fleet vehicles will reach the end of lease with less kilometres and leftover maintenance budgets which will be converted to ‘end of lease’ revenue,” the company said.
SG Fleet said orders for new vehicles increased by 25 per cent in FY2021 “with the closing pipeline up 83 per cent”.
“SG Fleet believes it will take several years for vehicle deliveries to recover to pre-COVID levels,” it said.
“Novated lease customers are being encouraged to place orders early to secure vehicles and SG Fleet expects the supply disruptions to push deliveries into 2022.”
Mr Blau said the company’s businesses in Australia, New Zealand and the UK continued to perform strongly in the second half of the financial year, while activity levels in the Australian novated segment and the UK employment benefits segment “improved significantly during the period”.
In Australia, he said new business grew steadily with “a number of uncontested contract renewals and tender wins”.
“Increasing interest in the company’s growing range of products and services was particularly focused on fleet efficiency and safety.
“Use of the Bookingintelligence asset management solution reached record levels, registering over 1.2 million transactions for the full financial year.
“Similarly, the company is seeing increased demand amongst larger customers for the eStart electric vehicle (EV) fleet transition solution as emission reduction strategies are high on government and corporate agendas.
“Customers also continued to opt for more flexible arrangements, such as subscription services.”
Mr Blau said while there was growth in both the corporate and the novated segments “delivering orders remains a challenge as vehicle supply is yet to recover”.
SG Fleet is also expected to complete the purchase of LeasePlan, which was announced earlier this year, on September 1, 2021.
“This will be a truly transformational moment for us and everyone on the combined team is very excited to start delivering on the benefits the acquisition will create,” Mr Blau said.
“Combined with the excellent progress we have achieved across the group during the financial year, and the rapid evolution of our products and services offering, it is a very exciting time for both businesses to come together and the future holds great promise for the combined entity.”
By Neil Dowling