Sequoia moves ‘onto the freeway’ after turbulent period

Sequoia Financial Group’s business simplification program has led to a strong profit growth for the first half of FY25, saying it is “bullish about our future”.

In the six months to 31 December 2024, its statutory net profit after tax (NPAT) from continuing operations enjoyed a notable rise of 137 per cent to $3.6 million from $1.5 million in the first half of FY24.

However, statutory NPAT inclusive of discontinued operations, such as Morrison Securities, was down by 87.1 per cent from $27.9 million to $3.6 million.

Operating profit (normalised EBITDA) fell by 14.6 per cent to $2.7 million from $3.2 million in the prior corresponding period.

The company’s operating revenue was down by 3.5 per cent from $62.8 million to $60.6 million. Sequoia described this as a “slightly weaker performance than anticipated” due to several closures and divestments during the half-year period.

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This included the sale of two general insurance broking companies and two media companies as part of its “continuing drive to remove non-core operations”.

The insurance broking divestments caused a slight revenue decrease in the licensee and adviser services division from $57.9 million in 1H24 to $55.8 million in 1H25.

Sequoia also refreshed its media business and lowered ongoing risk appetite within its specialist investment business to support more consistent and predictable returns.

Funds under advice (FUA) was $18 billion for the half-year period and the licensee has more than 350 financial advisers within its network.

The recent restructuring of the company into two key divisions – licensee and adviser services alongside legal and administrative services – has simplified its business model and led to significant cost efficiencies, Sequoia said.

It also reduced its headcount by more than 10 per cent as a result of the business simplification and cost reduction program. The decrease will save approximately $1.5 million annually in employment costs, it said.

Speaking on its results webinar, Sequoia’s CEO and managing director Garry Crole reflected on the difficulties it had previously experienced and shared a positive outlook for the future.

“Sequoia is in a strong position to benefit from industry tailwinds as demand for financial services continues to increase. From my perspective, much of the last 12 months has been difficult. This is a growth business; the opportunity for us is significant,” he said.

“But I’ve personally felt a bit like being caught in peak hour traffic. I know where I want to go but getting to the end destination is taking longer and we’ve had interruptions, roadblocks and all sorts of things that have been frustrating.

“The positive that I’m actually seeing is I believe we are now moving off that roadblock into a freeway. Parts of the industry tailwinds really excite me about where we can now take this business.

“We have a vision and it’s a big game. We’re really excited to take this very small company to a much larger company over the next three to five years. It’s an analogy but we’re coming out of the congestion and we’re entering the freeway.”

Sequoia’s board declared an interim fully franked dividend of 2.0¢ per share.

When asked about future M&A, Crole said Sequoia is “always looking” for additional acquisitions in salaried advice practices, but also remains focused on organic growth via increasing its adviser numbers.

The firm expressed a confident outlook for the remainder of FY25 as it continues to realise benefits from its business simplification initiatives.

“We are bullish about our future as we undergo significant but necessary changes to our business. We expect the remainder of FY25 to be strong as we start to realise the full value of recent changes within our businesses, and as we continue to execute on our key strategic initiatives,” the announcement said.