AMA Group CEO Andrew Hopkins has told shareholders that fiscal year 2021 (FY21) “has got off to a great start”, with year-to-date (YTD) financial performance tracking ahead of expectation despite Victoria’s extended COVID-19 lockdown.
In his 2020 AGM address, Hopkins said the outlook for AMA remains “very positive”, with the business emerging from the pandemic in a strong position due to increased volume and margins. The AMA Panel division and Capital S.M.A.R.T are fully operational in all states except Victoria, which is expected to return to full capacity by the end of December 2020.
According to Hopkins, AMA responded well to the challenges of the COVID-19 pandemic.
“In March 2020, COVID-19 diverted our focus to preparing the business to withstand the challenges that were expected at the outset of the pandemic,” said Hopkins. “We responded immediately and for the remainder of FY20 monitored and adjusted the lockdowns and restrictions imposed by the Australian and NZ governments.
“We used the government wage subsidies for the exact reason they were meant – our staff – and anything the government didn’t cover, I am pleased to say AMA did. So no one missed out, which has helped to instil in our workforce that AMA is a compassionate and people-focused business and this will enable us to keep our valuable employees and retain key skills within the business in readiness for post COVID-19.”
Despite the challenges, Hopkins said the group was “unwavering” in securing favourable and increased repair pricing across its major insurance customers, which was fundamental to improving margins into FY21.
“Our improved and very pleasing FY21 YTD results have demonstrated how fundamental this was for the business to return to expected margins,” said Hopkins. “The improvements and cost management disciplines we implemented as a result of the pandemic are certainly a silver lining and are here to stay and will contribute to the margin improvement for FY21.”
AMA’s position has also been improved via the divestment of its ACAD division.
“The circa $70 million cash proceeds from the ACAD sale will lower our debt levels and I look forward to the year ahead – perhaps one with less uncertainties, which will allow the business to develop, grow and achieve its objectives and aspirations for the benefit of all stakeholders,” said Hopkins.
The group will continue to make acquisitions a key part of its growth strategy.
“As the leader in the panel industry[’s] consolidation in Australia, the business will continue its focus on acquisitions in the panel repair sector in Australia – a $7 billion dollar repair industry, targeting our aspiration to grow past the $1-billion-plus company [level] in panel, replacement parts and claims management,” said Hopkins.
“If we look back to October 2019, we almost doubled the size of our business with various acquisitions including the acquisition of Capital S.M.A.R.T and ACM Auto Parts, and we set our sights on further growth and increased earnings. This transaction secured a significant customer and with that came significant opportunity for growth over the long term. The business has now been fully integrated, and the paint rollout across Capital S.M.A.R.T will be complete in December 2020. The synergies we anticipated when buying Capital S.M.A.R.T of at least $17 million on an annualised run-rate will be achieved, I’m pleased to say.”
Hopkins said other acquisitions took “a back seat” while the group focused on Capital S.M.A.R.T, although the consolidation of the panel industry still has a long way to go. He added that the growth of AMA’s “core business and capability” will return in January 2021 with a number of potential additions earmarked in the second half of this year.