Reporting Season

Smartgroup issues special dividend, poised to benefit from improving vehicle supply

Fri 18 Feb 22, 12:31pm (AEST)
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Key Points

  • Expects growth to pick up as vehicle supply improves
  • Supply-chain challenges curbs $12m revenue for Smartgroup
  • Client wins & renewals contributes to mid single-digit earnings growth

The market appears satisfied with the mid-single digit earnings growth that salary packaging and fleet management company Smartgroup (ASX: SIQ) has put on the table. The company’s share price rallied 6% as the market opened.

Financials for the year ended 31 December 2021:  

  • Revenue of $221.8m, up 3% 

  • Profit after tax of $69.5m, up 7% 

  • Final dividend of 19 cents per share 

  • Special dividend of 30 cents per share

This brings total dividends for the year to 72 cents per share, up 66% compared to last year. 

Salary packaging steadies 

Smartgroup added approximately 17,000 additional salary packaging customers in the last 12 months, growing its portfolio by 4.7%.

Encouragingly, the company achieved a 100% success rate in renewing or extending all of its top 20 contracts that were due in 2021.

This included heavyweight clients such as the Department of Defence and other major health, not-for-profit, education and government players. 

Covid keeps vehicle leases at bay

The supply of motor vehicles across Australia and globally continued to pose challenges, and Smartgroup was no exception.

The company flagged that “an unprecedented number of novated lease vehicles that have been ordered but not yet delivered to customers”.

“By the end of 2021, this pipeline of novated lease vehicle orders was around four times pre-COVID-19 levels, representing a significant amount of delayed revenue of around $12 million.”

Despite the backlog, vehicle leasing volumes managed to rise 4% on-the-year and the primary contributor to the company’s overall revenue growth. 

Poised for growth

Smartgroup believes its business is "well positioned to benefit from improvements in vehicle supply", taking into consideration the $12m of delayed revenues.

January vehicle leasing leads have so far shown promise, up 8% compared to last year.

Written By

Kerry Sun

Finance Writer & Social Media

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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