Company Interview / Smartgroup's digital smarts driving growth

Key points:

Smartgroup (ASX:SIQ) achieves record customer growth and 12% profit increaseTransformation strategy focuses on digital investment and operational efficiencyBattery electric vehicle orders up, plug-in hybrid demand drops after policy changeMedium-term outlook remains positive, with margin improvement expected from 2027

Jason King from Smartgroup expresses satisfaction with the company’s recent performance, highlighting record customer numbers and a notable 12% rise in profit. King attributes these results to the company’s success in penetrating its broad client base, which represents a significant addressable market of 2.4 million potential customers. Growth has been broad-based across Smartgroup’s divisions, including salary packaging, novated leasing, and fleet management, with each area reaching record numbers. The dividend has also risen by 11%, reflecting continued strong yield for investors.

Smartgroup is committed to a multi-phase transformation strategy, with King outlining an initial focus on front-end digital investment to boost customer engagement and refresh digital assets. Looking ahead, the company will target operational efficiencies and leverage modern technologies, including artificial intelligence, aiming to streamline workflows and enhance the customer experience. King suggests 2026 will be pivotal for the transformation rollout, with meaningful margin improvements expected from 2027.

The latest half year brought changes in new car lease orders, with plug-in hybrid volumes dropping following the removal of certain tax incentives, but battery electric vehicle orders increasing in response. The internal combustion engine segment also showed growth. King views the medium-term outlook as positive, supported by a relatively stable external environment and robust strategic execution.