AMA Group used its H1 FY2021 Investor Presentation to outline its plans to grab a bigger slice of the Australian body repair industry, saying it sees “substantial opportunity” in a market it values at $7 billion, while also revealing a new governance strategy under the leadership of recently appointed CEO Carl Bizon.
“My background in fixed operations and large corporate businesses will see the transition of the business from an entrepreneurial and big-picture leadership style to one of strategy, operations and outcomes,” said the new AMA CEO. “My background also includes a focus on governance and cultural transformation, so there will be an increased attention to further development of appropriate policies, systems, processes, controls and risk management expected of an ASX 300 public company,” Bizon added.
AMA said it is on track to return to “pre-COVID acquisition pace”. Viewing its growth as “organic”, the group plans to sell the benefits of its “high-quality cost-effective repair solutions” across multiple vehicle types, along with its extensive and expanding geographic coverage. According to AMA, the constantly evolving automotive insurance market and Australasian car parc present a “steady flow of opportunity” for a well-capitalised market leader.
Bizon said the group’s “live, near-term pipeline of opportunities” equates to approximately $100 million in revenue, and the company is committed to pursuing further market consolidation. AMA plans to secure additional “SMART locations”; panel shops targeting prestige, non-driveable and high severity repairs; and heavy motor vehicle sites.
The company says the impact of COVID-19 and the increasing challenges of advanced technology and vehicle complexity on small independent panel businesses presents further opportunity for increased industry consolidation.
In addition, the group plans to expand margins through direct sourcing and distribution of consumables and parts. It will strive for “operational excellence” by reducing costs and lifting margins; increasing productivity, paint and consumable yields; repairing versus replacing; and ADAS recalibration capability development. The group will also drive branch level performance through benchmarking, staff development and adopting best practices, as well as reducing overheads by employing solar energy, LED lighting and rent negotiations.
AMA also wants to attract talent to the industry by defining and consolidating culture, developing and retaining key industry skills, and recruiting apprentices.
The continuation of COVID-19 is seen as an impediment to the company’s expansion, with lower volumes affecting site productivity, reducing efficiencies and the ability “to realise synergies” throughout the group. The increasing use of ADAS is also seen as a factor limiting growth.
On the other hand, the group expects the COVID-19 vaccine rollout to hasten a ‘return to normal’, increasing traffic volumes as ‘return to work’ occurs and people’s reluctance to use public transport continues. AMA said domestic driving holidays will increase kilometres travelled while forecasted La Nina weather conditions have historically increased repair volumes.
Read about AMA Group’s first half FY2021 financial results here.