Smartgroup Corporation Ltd (ASX: SIQ) has seen its share price rise notably on Wednesday, following the release of its earnings results for the first half of the 2024 financial year. The company's shares are trading at $7.88, reflecting a 4.5% increase for the day, as investors respond positively to the robust performance outlined in the update.
Key Highlights of the First Half
For the six months ended June 30, 2024, Smartgroup reported significant improvements in its financial metrics:
- Revenue: The company achieved a 27% increase in revenue, reaching $148.5 million compared to the same period last year.
- EBITDA: Earnings before interest, tax, depreciation, and amortisation grew by 20%, totaling $56.2 million.
- Net Profit: Net profit rose by 16% to $34.1 million.
- Dividend: An interim fully franked dividend of 17.5 cents per share was declared.
These results underscore Smartgroup's solid performance and operational efficiency during the first half of the financial year.
Operational Developments
The company's growth trajectory remained strong throughout FY24. Smartgroup's revenue increase was driven by a 27% rise in leasing settlements, with electric vehicles making up 42% of new car leases during the period. The rise in operating costs to $85 million was attributed to scaling operations to meet growing demand.
In a strategic move, Smartgroup divested two non-core businesses to sharpen its focus on core operations such as salary packaging, novated leasing, and fleet management. The company expanded its active customer base to 402,000, marking a 17,000 increase from the previous year.
Additionally, Smartgroup secured a long-term contract with the South Australian government, starting July 2024, to manage salary packaging for over 110,000 government employees. This contract is expected to reinforce Smartgroup’s position as a leading provider in this sector.
Management’s Perspective
Scott Wharton, Managing Director and CEO of Smartgroup, expressed satisfaction with the company's performance. He highlighted that the first half of 2024 showcased a solid financial and operational performance, with strong demand for leasing continuing to drive growth.
Wharton also noted that the company had made significant progress on its strategic priorities, including the establishment of a new operating model and executive team, delivery of new digital assets, and divestment of non-core businesses.
Looking Ahead
For the remainder of the financial year, Smartgroup is focused on maintaining its growth momentum. While specific financial guidance for the second half was not provided, the company anticipates continued strong demand for new leases. The upcoming focus will be on accelerating digital investments in leasing and salary packaging products to enhance customer experience and productivity while maintaining cost efficiency.
Smartgroup Corporation Ltd has demonstrated strong performance in the first half of FY24, with positive implications for its share price and future growth prospects.