The price rises will help but with parts and paint going up 8%...

The price rises will help but with parts and paint going up 8% yoy and wages expected to increase by 5% (conservatively) on average I believe these increases with be quickly absorbed into by the CODB. I can’t see them getting much more than a 5% increase of that.

The expansion of competition like MotorOne, Fortress, Drive Group and Care most of which I would consider still in their infancy will lessen AMA’s position on the proposed price rises and the fact their Suncorp Drivable volume deal is not longer exclusive to AMA within SMART’s PMA’s (so I am told but can not confirm) will allow competition to grow as quickly as they can secure realestate and staff which they seem to be doing via some of the high profile ex employees. The insurers all have a sour taste in their mouth from the price rise demands last year they saw the lose in excess of 100m of revenue so will snap up non AMA capacity as soon as it becomes available in my opinion.

With more contracts set to expire and not be renewed come June 30 I believe the above, now non exclusive volume will be more important than ever.

Listening to the webinar and pieces of the follow up address to the staff by CB all I see is short term initiatives to reduce costs to meet banking covenants with little in the way of longer term strategy.

No mention of the 30-40 redundancies just completed in any of it. You would think of it was a genuine restructure with 4m+ bottom line benefit it would have gotten a mention. As I see it it is panic stations to reduce costs at all costs, especially given some of those redundancies were staff working on the initiatives he was promoting on the webinar like training and leakage reduction.

I don’t know how long they can get away with plugging “Normalised EBITDA” figures with very real and large operating and cash flow losses.

In my eyes they have the wrong bum in the big chair and it is heading for a sell off if they can’t stem the cash bleed. Pitching a good screenplay and making the movie are very different things and CB seems to be good at the former and not so much on the later.

We’ll see I guess. For now I’m out and will stay out and watch from the sidelines.

GLTAH