Supply Network Limited (Supply Network, the Group, ASX: SNL) imports and distributes truck and bus parts in Australia and New Zealand under the Multispares brand. The business employs 500 people, and offers related services including parts interpreting, supply management and procurement.
Supply Network’s earnings consistency remains a distinguishing feature of the Group as it releases the unaudited profit after tax for the half-year to 31 December 2024.
The interim half-year management accounts reveal that consolidated revenue is up 17 percent to $171 million and profit after tax is 31 percent higher at $19.8 million, compared to the December 2023 half-year. This figure includes the $0.4 million profit after tax on disposal of the Group’s Christchurch property. Final half-year results will be released to the market in late February.
A fully franked interim dividend of 32 cents per share will be paid on 4 April 2025. In a display of strong shareholder return bias, shareholders participating in the Dividend Reinvestment Plan (DRP) will be issued shares at a 2.5 percent discount to the ex-dividend share price, which will be capped at $32 per share. This compares to the current share price of $35.33. Discounts of this size are often reserved for institutional and professional investors participating in a capital raising and are rarely offered to retail shareholders. It is little surprise that the participation rate in the DRP is a high 83 percent.
The DRP is an effective and equitable capital raising tool for expansionary capital and is an indication that the Group’s growth in the branch network and delivery van fleet is likely to continue. Shareholders not already participating in the DRP have until 26 March to notify the
Registry of their interest if they would like to take advantage of the capped DRP share price in respect of the interim dividend.
The opportunity cost borne by owners and operators of trucks and buses that are off the road waiting for replacement parts necessary to effect repairs, is high. Trucks are capital-intensive with high maintenance costs, and time not spent on the road is money fore-gone to the operator, merchants, and consumers too.
This is why truck owners will pay a premium price to have critical replacement parts delivered to them swiftly to minimise downtime and loss of revenue. Supply Network has a reputation for meeting this critical need with speed and precision by operating an extensive network of delivery vans where 80 percent of deliveries of replacement parts are available to customers within four hours of an order being placed. The delivery vans are an integral part of the supply chain that includes strategically located branches to ensure a pre-eminent service level.
This best-in-class service commands a premium price level for replacement parts that enhances profit margins earned by the business and generates superior returns to shareholders. Put simply, this superior customer service ethic is Supply Network’s durable competitive edge.
The management team at Supply Network devote their business to customers who value outstanding service above low product cost, and this key dynamic supports the Group’s sustainable profit growth and high return on capital employed compared to its competitors.
Michael Kodari is a globally recognised investor, philanthropist, and leading financial markets expert, renowned for his exceptional performance. With a strong foundation in financial markets, Michael has advised leading financial institutions and governments.
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