Vehicle leasing firm Eclipx Group has produced a first-half profit of $13.2 million, a big improvement from the impairment-driven $120.3 million loss in 2019 that forced the company into a ‘corporate cleansing diet’.
That saw the company clean up and get rid of a series of under-performing businesses.
Earnings from its core businesses – Fleet Plus, Fleet Choice, and Fleet Partners – rose 10.6% to $45.7 million despite continuing weak car sales across the sector.
Total revenue for the half-dipped nearly 5% to $336 million.
Eclipx said its core fleet and novated lease business delivered growth across each major revenue line in the March half, with returns helped by cost cuts and lower spending.
This was partially offset by the group recognising provisions for inventory and fleet impairment of $535,000 as a response to COVID-19.
Revenue remains under pressure with the lockdowns relating to COVID-19 hitting business and knocking order rates for new vehicles under novated leases to about two-thirds of the usual level after a partial pick-up in April and early May.
The company said on Wednesday that while the new business pipeline remains solid, the emergence of COVID-19 from mid-March has led to the group prioritising extensions of existing leases, preserves liquidity, and partially deferring writing new business.
So far, the company has sold off five of the six businesses that were not wanted after last year’s revamp.
The company has sold GraysOnline, AreYouSelling, Commercial Equipment Finance Australia, Carloans.com.au, and Georgia — with the sale of the latter two completed in April.
The final sale is Right2Drive which actually did well for Eclipx in the March half-year contributing $5.6 million to the company’s net cash over the half-year compared to the $5.8 million detraction in the March half year of 2019.
Despite that improvement, Eclipx says it still plans to sell Right2Drive.
Eclipx shares rose 5% to 87 cents.
There’s no interim dividend.