I listened to much of the presentation.
It was very positive, in contrast to the share price decline so far today.
The company is not focused on acquisitions, a point that retiring CEO Mr Ward had to stress more than once as at least one of the junior female analysts didn't seem to appreciate that.
Mr Ward said that the company was in the best financial position he'd seen in his 16 years. Given his experience this is a standout comment!
New CEO Mr Keith Thornton and CFO Ms Sophie Moore impressed as a couple of safe hands, with both referring to the increased owned property portfolio and Ms Moore in particular the $100 million in cost savings during FY20. The latter struck me as a Herculean task, so well done.
The company is not focused on acquisitions, a point that retiring CEO Mr Ward had to stress more than once as at least one of the junior female analysts didn't seem to appreciate.
Instead, it is focused on organic growth through new car sales but with also a marked emphasis on used car EasyAuto123, its online business that has all metrics trending up in calendar 2021 except stock availability.
April and May 2020 sales were lossmaking while Victoria during lockdowns incurred significant losses - 'thank you' with gritted teeth to incompetent and egotistical Premier Daniel Andrews MP - with Mr Ward reminding participants that the new car market had been in decline for 23 months pre-COVID-19, then there was eight months of declining sales during the virus, with only the last three months positive. As new CEO Mr Keith Thornton said 'we're not out of the woods yet'.
JobKeeper payments only represented six weeks of wages as the company usually has an $80 million wages bill per month (an incredible figure given the popular image of barely staffed car yards or glass boxes along main roads).
OEMs are working with APE; for instance, two top 10 brands are to be in Indooroopilly in Brisbane's shopping centre while Toyota is to be in Brisbane's AutoMall, another two APE developments.
Mr Thornton made the interesting point that despite the company's relative under representation in Sydney and Melbourne, sometimes these cities did not always represent the best for shareholder returns as cost of land was high, as were operating costs and inevitably there were competing dealerships nearby.
The Holden c.$90 million impairment will not have any adverse financial implications in FY21, again another positive.
Mercedes-Benz is publicly said to be looking at a lower cost 'agency model' and is working with APE, but no other OEMs. Nonetheless these manufacturers have used COVID-19 as an opportunity to mothball or permanently close factories overseas with forecasts suggesting up to 20 million 'units' (cars/4WDs etc) may be annually taken out of global production. In some cases OEMs are redirecting such excess funds to electric vehicle research. Mr Thornton said OEMs determine where best to send cars. It is influenced by numerous matters including currency conversions, and Australia as a right hand drive market is in a minority situation.
Automotive supply chains have been disrupted, with Mr Thornton quoting how in one case, a manufacturer redirected processors to PlayStations instead of motor vehicles as the former were apparently more profitable. However Mr Ward said that despite these headwinds, APE has been able to increase sales including in the first month of 2021.
While as Mr Thornton rightly said with lockdowns, the virus rollout and COVID-19, 'the situation is fragile', I have a lot of confidence in him, Ms Moore and Mr Ward.
They really know their business and have a conservative financial strategy, yet are if anything all of a sudden swimming in cash, not the result we might have expected back in March 2020 when the adverse effects of coronavirus began to travel like a tsunami through the Oz economy.
Scomo's JobKeeper and Josh Frdyenberg's good national management (despite five of the six Premiers being hopeless, the exception being Gladys Berejiklian in NSW) helped, but APE also grasped the bull by the horns and acted decisively at lightning speed.
Exciting to consider that even with stock difficulties, both showroom sales and EasyAuto123 at APE are powering ahead.
Expand
(20min delay)
