Crash repairer AMA expects more business as lockdowns ease

Crash repair major AMA expects earnings to rebound as more people get back on the road once Covid-linked lockdowns ease.

Traffic on the Lincoln Causeway between Albury Wodonga backing up as people try to pass through the check point into Victoria between Albury and Wodonga. Picture: Simon Dallinger

Listed crash repair major AMA expects earnings to rebound as more people get back on the road following the Covid-linked lockdowns of the past year.

People limiting their use of public transport is also expected to result in more people on the road.

Crash repairs was among the industries hit hard by Covid restrictions, particularly in Melbourne where a 5km travel bubble was in force for several weeks.

While a sharp reduction in traffic benefited insurers, the lack of accidents, including small prangs and scratches, meant that work dried up for panel beaters.

In an investor update, AMA said strong performance in the September quarter continued into the December quarter.

All states were fully operational, with the exception of Victoria where activity was returning, it said.

The ongoing trend favouring private transport over public transport had continued to benefit AMA, the smash repairer added.

It noted mobility trends where traffic volumes had recovered in all capital cities.

“The business experienced a quicker than expected return to normal repair volume and operations following the lifting of restrictions,” AMA chief executive Andy Hopkins said.

He added that the business was well placed to pursue strategic aligned acquisitions in the second half of financial year 2021 aimed at delivering its growth and performance targets.

AMA, which is also behind the brand Capital Smart, said it was on track to deliver earnings margins within its targeted range of 9-10 per cent, helped by cost management and the revised contracts.

At the company’s recent annual meeting Mr Hopkins said the outlook for AMA remained “very positive”, with increased volume and margins.

“As statistics in other countries and Australia have shown, post-pandemic, private vehicle use is preferred to public transport, which positively impacts our volumes and earnings ­ability,” he told investors at the time.

The company has also secured improved pricing with key insurers, which had helped margins.

AMA posted a net loss of $62.1m in the year to end-June, which compared to a profit of $21.7m a year earlier.

Much of the loss was due to a writedown in the Capital Smart repairs business, given a downturn in activity as a result of Covid.

Separately AMA said it had finalised the sale of its automotive components and accessories division to GUD. The $70m proceeds will be used to retire debt, resulting in AMA’s net debt position of $158m at end-December.

Under the deal GUD will pick up brands including East Coast Bullbars, CSM Service Bodies, Automotive Electrical & 4WD Accessories, and NZ accessories maker Fully Equipped.

AMA shares closed flat on Thursday at 80c each.