Heavy commercial fleet business remains challenging
Commercial and personal vehicle leasing firm SG Fleet has recorded solid growth in annual profits, revenues and its own fleet, according to its annual results.
Profits for the international company rose 13.6 per cent to $67.7 million on a revenue rise of 7.9 per cent to 316.5 million, while its fleet rose from to 147,703 from 146,357.
“In Australia, we actively addressed some headwinds in the first half to produce a stronger second period, helped by additional customer wins and our growing products and services range,” chairman Andrew Reitzer says.
Read how truck operations affected the firm’s first half here
Trucking industry issues and industrial developments also had an impact on the company’s financial performance.
“Helped by the more positive mood in corporate Australia, our tool-of-trade business continued to see a constant stream of new opportunities,” CEO Robbie Blau says.
“We generated increased traction for our technology-based solutions and other add-ons with both corporate and government customers, in particular for car share services, driver safety programs, telematics, and our Bookingintelligence resource management solution.
“Late in the reported period, we also had a very promising response to our new Chain of Responsibility management product, Inspect365, which we have now begun to commercialise.
“Customers generally increased their overall spend on our services to access the cost savings we generate on their behalf.
“This has allowed us to grow overall profit independently of vehicle numbers growth, as noted earlier.
“Some of the growth in extensions that held back vehicle growth was attributable to the end of local vehicle manufacturing, which led some customers with ‘buy local’ fleet policies to delay replacements while they decided what imported vehicles are fit for purpose. We expect to see this backlog clear progressively.”
The firm also identifies “aggressive” competition as a factor, especially in the commercial vehicle space.
“As was the case in the 2017 financial year, the heavy commercial segment again proved challenging in terms of winning contracts at reasonable returns, particularly late in the first period, and its profit contribution declined from the previous corresponding period,” Blau says.
“However, this behaviour abated somewhat, benefiting the business’ performance in the second half.”