McMillan Shakespeare shares dip on order growth slowdown
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The news: Shares in McMillan Shakespeare Group tumbled on the ASX despite the salary packaging business boosting its full-year profit and dividend, as a slowdown in order growth disappointed investors.
The numbers: Shares lowered 4.5% to $17.49 by 2:50pm AEST.
McMillan Shakespeare reported full-year net profit from continuing operations of $90.06 million, up 39.7% year on year.
Normalised revenue of $526 million was up 12% compared to FY23 and largely in line with consensus estimates, according to Visible Alpha data.
Normalised EBITDA from continuing operations lifted 33% to $177 million, 3% ahead of average forecasts.
The company also declared a total dividend of $1.54 per share, up 6% on last year and 13% ahead of consensus.
The context: McMillan Shakespeare said that due to higher interest rates and cost of living pressures, it saw more people look to manage the cost of maintaining a vehicle and increase their disposable income via its core salary packaging and novated leasing services.
During the year, the company soft-launched a new brand Oly, which allows employees from small- and medium-sized businesses to access and manage a novated lease. McMillan Shakespeare said Oly will be rolled out and promoted more widely in FY25.
Citi analysts flagged that order growth in McMillan Shakespeare's group remuneration services (GRP) and plan and support services (PSS) segments slowed in the second half of the financial year.
What they said: "The result was a slight beat to consensus and the strong dividend should be well received," said Citi analysts.
"However, the concern from the result for us is on [novated] lease order growth slowing in the 2H and impacts to yields."
The sources: ASX announcement, Citi research
