McMillan Shakespeare to stand down majority of 1358 staff

Leasing group McMillan Shakespeare is set to stand down most of its 1360 staff as COVID-19 takes its toll on the car industry.

The car leasing and sales industry has been hit hard by the coronavirus crisis.

Vehicle leasing group McMillan Shakespeare (MMS) is preparing to stand down the majority of its employees, following significant sales declines as coronavirus hits the economy.

Beginning next week, the company will seek to stand down nearly all of its approximate 1358 staff, in an attempt to reduce costs during the economic shutdown.

“Effective from April 13, 2020, the company will temporarily move into a partial or full stand down of the workforce in most parts of the business where there has been or is likely to be a material change in workload,” it said told the ASX.

MMS noted the pandemic has prompted steep declines in both new novated leases and asset financing in Australia and New Zealand, with the focus of its asset financing business turning towards restructuring leases for companies impacted by COVID-19.

Its aggregation and risk businesses have also been significantly hit by lower volumes of finance originations and a continuing decline in car sales.

The group’s reported decline follows a bleaker outlook for the car industry, which is already experiencing a fall in sales of more than 60 per cent. 

MMS said its board, managing director and all group executives will take pay cuts of about 35 per cent, while its UK asset management business had furloughed non-essential workers and reduced salary to remaining staff.

“MMS is further responding to the current environment by reducing all non-essential operating and capital expenditure,” it said.”

“We will be matching our workforce to the activity in each of our business units and to support our customers.”

The company said salary packaging activity remains unchanged and could potentially benefit from various state governments increasing the healthcare workforce.

Its National Disability Insurance Scheme business, Plan Partners, has not experienced any disruption to date and continues to add new clients.

On March 19, MMS withdrew its earnings guidance for the 2020 financial year, saying the financial implications of the pandemic were impossible to predict.

The following day, MMS pressed ahead with paying its fully franked dividend to shareholders, at 34 cents per share.

As at December 31, 2019, the company had a total cash position of $50.9m and posted an interim net profit of $33.9m, a 0.3 per cent decline compared to the previous corresponding period.

The group’s earnings for the first half of the 2020 financial year stood at $57.2m, a decrease of 11.8 per cent compared to the previous year’s interim result.