Pendragon records £13.3m pre-tax profits 11 | 08 | 2010
CAR DEALERSHIP GIANT Pendragon plc has announced a £13.3 million pre-tax profit for the six months to June 30, 2010. Britain's biggest dealership groups, which operates a number of outlets across Scotland, saw revenue increase to £1,833m, up from £1,586.4m over the same period in 2009.
At the heart of its profitability, according to chief executive Trevor Finn, were reducing costs, driving operating efficiencies and improving its balance sheet, as well as the recovery in the market. This combination of factors led to an increase of 48.1% in underlying profit over the prior period to £15.7m with strong recovery in Stratstone and improvement in the Evans Halshaw division.
In the UK, the group operates 257 franchised points of which 112 are prestige, branded as Stratstone — a number of which are in Scotland, including Edinburgh Land Rover — 127 are Evans Halshaw volume dealerships and 18 are truck dealerships trading under the Chatfields brand.
Pendragon though has not been unaffected by the downturn. It sold or closed 11 franchise points in the first half, which resulted in total closure costs of £1.4m (2009: £6.1m).
The most profitable area of the group was identified as aftersales, where gross profit in the UK increased by 0.6% on a like-for-like basis over the prior period. And the group bucked the trend in relation to used cars. Despite prices falling in the sector, the group outperformed the market with first half used car volume increasing by 15.9% over the prior period.
In a UK market where, excluding the Scrappage scheme, retail registrations would have increased by 12.9%, Pendragon again outperformed the market, increasing by 14.1%. Operating profits also rose by £5.6m to £39m, which took adjusted earnings per share to 1.6p, compared to 0.9p in 2009. Significantly though, net borrowings were up considerably at £346.7m (2009: £317.7m). The reason for this is almost all due to increases in new vehicle stock related to new product launches. And though the cash impact of this additional stock requirement was approximately £35m, the group says it expects this will have reversed by the year end
"I am pleased to announce a significant improvement in the group’s performance in the first half of 2010 as we continue to benefit from the business initiatives undertaken by management and the recovery in the market," Finn said.
"The group has a core business well positioned to move forward. In particular, we continue to see growth opportunities from our aftersales and used car operations, the most profitable parts of our business, and are reassured by their strong performance during the period. Assuming economic and market conditions remain stable, Pendragon is well placed to build on its strong start to 2010.”
Jim McGill