AMA Group Ltd (ASX: AMA) shares have plunged today following the release of the smash repairer's half-yearly results for FY21.
At the time of writing, the AMA share price is trading at 65 cents, down 7.14% on yesterday's close.
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What's weighing on the AMA share price today?
The autobody repairer announced a net profit of $4.6 million for the half-year ending 31 December. This compares to a $12.1 million loss for the prior corresponding period (pcp).
While the results look promising, they come off the back of $14.2 million net profit from the one-off sale of the ACAD and Fully Equipped businesses. The company also received $28.4 million from the Australian and New Zealand governments' wage subsidy programs.
Employee expenses for the company were down only $2.4 million on the pcp. Without the wage subsidies, employee expenses would have been up $26 million.
At the same time revenue from continuing operations was up $71 million on the pcp for a total of $435 million.
COVID-19's impact on AMA
The company attributed its result to the "challenging market conditions" of the COVID-19 pandemic.
"[Government] restrictions affected one of the key external drivers of our business, kilometres travelled." AMA Group highlighted the Victorian lockdown in particular as a financial hindrance.
Post-lockdowns, however, the company said it believed it had benefitted from the restrictions, stating:
"The Group benefited from the preference to use private transport over public transport and the shift to domestic driving holidays as opposed to international travel."
In a presentation to investors, AMA did warn that the prospect of state-border closures and higher working from home rates could adversely impact the business. At the same time, the presentation outlined its belief that the vaccine rollout could "hasten the return to normal".
AMA's feud with former CEO
Andrew Hopkins resigned as CEO of AMA Group on 31 January 2021, effective immediately. The resignation followed the company's board of directors receiving a report in relation to allegations made by an employee of the company. It is unclear if Hopkins was the subject of the report.
The company is pursuing Hopkins for a total of $2.4 million of reimbursement – comprised of a $1 million bonus and $1.4 million employee loan. The company claims it has not received a single cent back from Hopkins as of the release of the report.
Carl Bizon was appointed as the new CEO on 1 February.
Future outlook
On 5 February AMA Group acquired truck repairer National Central. The company stated the purchase aligned with its "strategic direction of expanding into the heavy vehicle collision repair industry."
According to the Federal Chamber of Automotive Industries (FCAI), total car sales were down 13.7% in calendar year 2020 compared to 2019. FCAI attributed the decline to the economic downturn caused by the COVID pandemic. However, vehicle industry analytics platform Datium Insights expects an uptick in car sales this calendar year, which could bode well for shares like AMA Group.
The company is also forecasting an increase in turnover due to the La Niña weather phenomena, as wetter driving conditions increases the likelihood of accidents on the road.
The AMA share price is down more than 20% in 2021. On current prices, the company has a market capitalisation of $519 million.
