AMA Group and BASF Australia have created a “renewed 10-year partnership” for the supply of BASF’s automotive paint technology across the entire AMA Group network.
The agreement extends the existing contract by two years and, according to AMA, “improves alignment of paint supply costs to the operating cash flows of associated repairs”. It also confirms the “conversion of future one-off market incentive payments to ongoing payments received as purchases are made”. The balance of the remaining first tranche of incentive – approximately $40 million – will also be amortised over the term of the new agreement.
The company says the annualised improvement of recurring operating cash flows is projected to exceed $10 million per year during the contract period, with no material impact to earnings as the overall value of the market incentive arrangements are unchanged.
“We are pleased to have affirmed and extended our strong relationship with BASF who continue to be a key partner of AMA Group,” said Carl Bizon, Chief Executive Officer of AMA. “Their eco-effective paint technology is already in use across our whole repair network and delivers exceptional results for our customers.”