FleetPartners’ Shift to Balance Sheet Funding Pressures Profit Despite Strong Growth

Strong Financial Performance Amid Market Recovery

FleetPartners Group Limited (ASX: FPR) opened its 2025 Annual General Meeting with Chair Gail Pemberton highlighting a year of robust recovery and strategic progress. The easing of supply chain constraints that had hampered the automotive leasing sector during the pandemic years allowed FleetPartners to unwind a record back order book and capitalise on surging demand for battery electric vehicles (BEVs) and plug-in hybrids (PHEVs), particularly within its Novated leasing segment.

This momentum translated into record New Business Writings (NBW) of $924 million for FY24, marking a 21% increase on the prior corresponding period and reflecting a compound annual growth rate (CAGR) of 10% since the launch of its Strategic Pathways plan in FY21. Assets Under Management or Financed (AUMOF) also grew 11% to reach $2.3 billion, underscoring the company’s expanding footprint in fleet management.

Profitability and Capital Management

Despite the strong top-line growth, NPATA (Net Profit After Tax and Amortisation) edged down slightly by 1% to $88 million. This was attributed to a strategic shift from a mix of purchase and assumption (P&A) funding to predominantly balance sheet funding, which impacted management fees and commissions. Nevertheless, the company maintained a disciplined approach to cost management, with operating expenses growing at a modest CAGR of 3% over four years, well below revenue growth.

FleetPartners’ business model demonstrated resilience, with 90+-day arrears remaining low at 44 basis points, supported by the critical nature of leased vehicles as revenue-generating assets for corporate clients. The Group’s cash conversion ratio was an impressive 128%, and it ended FY24 with a net cash position of $31.3 million, benefiting from carried-forward tax losses that defer cash tax payments until at least late FY26.

In terms of shareholder returns, the Group declared a capital return of $59.4 million through its on-market share buy-back program, equivalent to a payout ratio of approximately 68% of NPATA. Since the program’s inception in FY21, FleetPartners has repurchased $233 million worth of shares, representing 30% of shares on issue. The company signalled a potential resumption of dividends once franking credits accumulate, prioritising buy-backs in the interim.

Advancing ESG and Sustainability Leadership

Environmental, Social, and Governance (ESG) initiatives remain a cornerstone of FleetPartners’ strategy. The Group’s 2024 highlights include the endorsement of its 'Reflect' Reconciliation Action Plan by Reconciliation Australia and the release of its second Sustainability Report aligned with the UN Sustainable Development Goals, Global Reporting Initiatives, and the Task Force on Climate-Related Financial Disclosures.

Notably, FleetPartners launched a Green Bond Framework and successfully issued its inaugural $75 million Green Bond in May 2024, broadening its investor base and reinforcing its commitment to sustainable finance. The Group also maintained its Climate Active Carbon Neutral certification in Australia and Toitu Net CarbonZero certification in New Zealand, making it the first fleet management company globally to hold both certifications.

On the social front, the company continues to foster diversity and inclusion, earning recognition as a WGEA Employer of Choice for Gender Equality. Governance practices are supported by a balanced and experienced Board, ensuring robust oversight and succession planning.

Looking Ahead

Chair Gail Pemberton closed her address by expressing confidence in FleetPartners’ ability to deliver sustainable earnings per share growth through the Strategic Pathways plan and the upcoming implementation of the Accelerate business transformation program in FY25. The Group’s disciplined capital management and ESG credentials position it well to navigate evolving market dynamics and client demands for lower-emission fleets.

As the company transitions into FY25, investors will be watching closely how the Accelerate program impacts operational efficiency and profitability, alongside the continued uptake of electric vehicles within its leasing portfolio.