Rapidly expanding ASX-listed automotive conglomerate, AMA Group, has negotiated revised terms with Insurer Suncorp for its Capital SMART panel repair business, with the new terms to include increases in average repair pricing and increases in volumes. AMA said the new agreement with Suncorp recognises the additional costs associated with repairing modern vehicles safely, including the increasing costs of new technologies such as Advanced Driver-Assistance Systems.
AMA achieved automotive industry heavyweight status in October last year with the acquisition of Suncorp’s automotive parts and panel businesses. It is now continuing on its growth trajectory which should get a further shot in the arm courtesy of the latest agreement with its major customer Suncorp, to lift average repair pricing.
AMA Group CEO, Andrew Hopkins said: “I am pleased with the outcome for both Suncorp and the AMA Group. The result strengthens our long-standing relationship and recommended repairer status with Suncorp. The revised terms and volume commitments show Suncorp and AMA Group working together to ensure customers receive high quality repairs and service as well as delivering ongoing shareholder value.”
AMA said that its group of companies traded strongly throughout the third fiscal quarter due to the normalisation of weather conditions and a sharpening focus on specific initiatives that has led to increased volumes and a hike in the all-important operating margin metric.
Whilst AMA said its third quarter performance was solid and on track to see its FY20 guidance numbers achieved, last week management decided to remove the FY20 market guidance numbers issued in February due to the uncertain impact of the Coronavirus and the lack of people travelling and moving around the country because of it.
The company has sought to reduce operating costs and preserve capital wherever possible in response to the Coronavirus and importantly, it has moved to negotiate rent reductions with its landlords.
New detailed plans have been developed to ensure maximum efficiencies are maintained in the repair network and all non-essential capital expenditures have been put on hold.
The company said it had sufficient financial resources at its disposal but chose to engage with its lenders early in the COVID-19 pandemic to ensure it had access to additional liquidity if necessary, with a view to comfortably withstanding any protracted period of operational disruption caused by the Coronavirus.
AMA said its lenders remain supportive and have agreed to re-purpose its existing facilities to increase AMA’s working capital facility by another $35m. AMA’s financiers will also waive covenant testing to December 31, 2020 and provide a more favourable covenant testing regime for the balance of FY21.
AMA Group CEO, Andy Hopkins said: “I am pleased to have the support of our Bankers to ensure the Company remains resilient to the challenges it is facing and, with strong financial resources, a committed management team and employees we will navigate the business through these uncertain times.”
“This event is unprecedented. But as the leader in the automotive repair and aftercare market and with a supportive Board we are well positioned to meet market demand and capitalise on opportunities when conditions stabilise for the long-term benefit of our employees, customers, shareholders and all our stakeholders.”
Is your ASX listed company doing something interesting ? Contact : matt.birney@businessnews.com.au
By Matt Birney
