ASX-listed automotive panel and repair shop conglomerate, AMA Group, has locked in improved pricing with key insurers, effective from July after concluding service agreement negotiations with all key players. The renegotiated prices are expected to result in meaningful growth across the company’s Australian and New Zealand network of panel repair workshops that already look set to benefit from a lack of public transport use during COVID-19.
AMA Group CEO, Andrew (Andy) Hopkins said: “The outcome of the negotiations with our Insurer partners is pleasing and I am certain that the new service agreements will deliver the desired outcome for both AMA and our Insurance partners.”
The new pricing arrangements should give AMA management some financial forecasting certainty as it kicks off its newly locked down contract with fleet management, vehicle leasing and salary packaging firm, SG Fleet. SG boats a total vehicle fleet of 140,000 vehicles and AMA is expecting that contract alone to deliver it an increase in annual repair jobs of around 4000.
As Australia’s economy exits the Coronavirus-inspired ‘fiscal fog’ and Australia’s motorists get back on the road, both travelling to work and holidaying locally, AMA Group said it was expecting repair volumes to return to pre-COVID levels early in the third quarter of this year.
The company noted last month that indications from the “Australia Mobility Index” show a much sharper upward trend in people driving their own cars, compared to those taking public transport, as the ever-present threat of COVID-19 impacts the travelling public’s transportation choices.
The company said that in part, as a result of ratcheting back its cost base and staffing numbers during the pandemic, its forecast net debt position at the end of June is expected to be better than was anticipated at the outbreak of Covid-19 and that it would likely be similar to its net debt position as of 31 December 2019
Mr Hopkins added: “As restrictions continue to ease, we are seeing repair volume return across all parts of our business. I am confident we will emerge from the Covid-19 pandemic with a continued focus on operational performance and efficiency as we now set our sights on growth opportunities in the sector and on delivering shareholder value.”
Whilst the coronavirus has put a dent in many smaller automotive businesses, it is likely AMA’s size and fiscal strength will allow the company to continue its acquisition strategy with vigour after COVID-19 has finally passed.
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By Matt Birney
