FleetPartners Group Completes Transformation, Offers Positive FY26 Outlook

FleetPartners Group (ASX:FPR) announced the completion of its multi-year technology and operating transformation during its annual general meeting, outlining a solid financial outlook for FY26. The meeting provided insights into the company’s FY25 performance and discussed changes in capital management that focus on increasing shareholder returns.

Completion of the Accelerate Program

Chair Gail Pemberton described the completion of the Accelerate program as a significant milestone for FY25. This initiative consolidated various brands, systems, and processes onto a unified platform across Australia and New Zealand. Pemberton emphasized that this transformation improved scalability, efficiency, and customer experience, although some novated customers faced temporary service disruptions during the transition. These issues have since been resolved.

The financial metrics for FY25 showcased the effectiveness of the transformation. The company reported strong portfolio indicators, which are expected to contribute positively to future performance.

Changes in Capital Management and Dividend Increase

During the meeting, both Pemberton and CEO Damien Berrell discussed significant changes in capital management strategies. The board has increased its capital payout ratio range to 60% to 70% of NPATA, shifting focus from a share buyback program to dividends as the primary means of shareholder returns.

The company announced an unfranked dividend of AUD 29 million, translating to AUD 0.136 per share. This dividend represents the midpoint of the new payout ratio range and an annualized yield of 8.9% at the time of announcement. Berrell noted that the buyback program, which began in FY21, had returned AUD 310 million to shareholders since its inception. The unfranked status of the dividend results from carry-forward tax losses, but management anticipates resuming franking after September 2026.

Strategic Growth Initiatives

Looking ahead, FleetPartners has developed a post-Accelerate strategy focused on four key pillars: attracting new customers, retaining existing ones, increasing share of wallet, and optimizing profits. Pemberton highlighted the acquisition of salary packaging and novated lease provider Remunerator, announced on November 17, as a strategic move aimed at enhancing salary packaging capabilities and expanding the addressable novated market. This acquisition is expected to be earnings accretive.

Berrell characterized FleetPartners’ business model as providing “stable, predictable, and recurring earnings,” with approximately 95% of core income being annuity-like, embedded in leases averaging 3.9 years. He also noted that around 80% of leases remain active from start to finish, with a 90% replacement rate for leases rolling off.

First-Quarter FY26 Trading Update

In the first quarter of FY26, Berrell reported a 2% increase in core income compared to the previous period, despite challenging market conditions that affected new business writings, which totaled AUD 185 million, a decline of 13% year-on-year. The total assets under management or financed reached AUD 2.4 billion, remaining stable excluding the impact of Remunerator.

End-of-lease income per vehicle was recorded at AUD 5,571, slightly down from the second half of FY25. Management indicated an illustrative embedded end-of-lease income of approximately AUD 250 million for FY26. The company expects marginal growth in new business writings, stable core income, and consistent end-of-lease income, supported by ongoing operational discipline.

Berrell also highlighted potential demand drivers, noting that interest in electric vehicles could bolster novated leasing momentum. He mentioned the government’s statutory review of the Electric Car Discount Bill, though it remains too early to assess its potential impact on demand. Recent successes in tendering for large fleets and growth in small fleets across both Australia and New Zealand were also noted.

During the shareholder Q&A session, Pemberton confirmed that the board had engaged with major proxy advisers, reporting no recommendations against any resolutions. She indicated her intent to stand for re-election for what is likely to be her final term, while the board plans to advance chair succession planning in the coming years.

The AGM concluded with all resolutions being put to a poll, with results expected to be released to the ASX after they have been counted.

FleetPartners Group Limited specializes in fleet management services across Australia and New Zealand. Operating under three segments—Australia Commercial, Novated, and New Zealand Commercial—the company offers vehicle fleet leasing and management, novated leasing, salary packaging, and vehicle accessories and sales solutions. The organization was formerly known as Eclipx Group Limited before rebranding in March 2023.