The McMillan Shakespeare Limited (ASX: MMS) share price traded 9% lower on Monday following a profit downgrade.
Through various subsidiaries, McMillan Shakespeare Limited (MMS) has grown to become Australia’s largest provider of salary packaging and novated leasing services and is a leading provider of fleet and asset management financing.
In an ASX press and investor release today, McMillan Shakespeare released news informing investors that it is, “…experiencing more challenging market conditions in Australia, New Zealand and the United Kingdom (UK) than expected.”
The company said weak business conditions, the fall in new car sales, regulatory and insurance changes are hurting the business.
“In Asset Management in Australia, a flat market and an increase in customer inertia (delaying decisions to invest) is impacting profitability,” the company noted.
Between 2018 and 2019, the ABS reported that the number of vehicles on Australian roads increased by 1.7% to 19.5 million vehicles.
Over in the UK, McMillan flagged poor market conditions as leading to the fall in vehicle registrations and margins.
Ultimately, McMillan expects to report an underlying net profit of between $83 million and $87 million in its 2020 financial year.
This compares to the reported result of $88.7 million in 2019.
McMillan is expected to report its first-half financial results on February 19, 2020.