Heavy vehicle challenge for SG Fleet

Heavy commercial operations profit fall $1.4 million in first half for fleet manager

Heavy vehicle challenge for SG Fleet
SG Fleet recorded a higher profit in the first half of 2017-18


Vehicle leasing and fleet management firm SG Fleet Group has recorded a net profit after tax of $31.6 million for the first half of the 2017-18 financial year, despite a lower contribution from its heavy commercial vehicle arm.

The company’s first half net profit was 18.8 per cent higher than the $26.6 million recorded on 31 December 2016, on the back of a 15.4 per cent increase in revenue company-wide to $154.2 million.

Much of the increase was due to the company’s acquisition of UK companies Fleet Hire and Motiva in late 2016, which have increased the company’s contract hire and salary sacrifice offering.

Yet SG Fleet also says headwinds from some divisions had reduced its annual revenue – with expenses up 19.2 per cent to $109.7 million over the course of the half.

SG Fleet CEO Robbie Blau says the contribution made to the company’s profits by its heavy commercial operations was $1.4 million less than in the previous corresponding period.

"Heavy commercial has been a challenge for some time in terms of winning contracts at acceptable returns and this played out again particularly late in the period," he says.

Despite this, the company was determined to maintain its pricing discipline, Mr Blau said.

"We continue to address this issue without compromising future profitability. We have no intention of kicking the can down the road by competing on price now then paying a penalty a few years later."

Blau adds that the business was extending its market share with higher value-add technology-based solutions for existing corporate and government customers, adding that the company’s second-half performance was typically stronger than the first half.

"We are developing a product that will help commercial transport operators manage the Chain of Responsibility legislation that will come into effect later this year," he says.

"A number of the telematics trials that we referred to previously are now being converted into contracts and the penetration of other tech-based products is accelerating further."

The company had noted an increasing demand for telematics and other technology-based solutions in its full year profits announcement in August 2017.

"The mobility concept is also gaining greater acceptance. For example, we are now actively involved in the design of a mobility chain for one of our major customers. These opportunities create additional revenue sources for us," Blau says.

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