Eastern drives back into profit 29 | 09 | 2010

ONE OF SCOTLAND'S largest dealership groups, Broxburn-based Eastern Holdings, has returned to profit through a combination of cost-cutting exercises — staffing levels have dropped from 920 to 845 — lower interest rates and improved margins.

The privately-owned company, which operates 34 dealerships and 17 franchises — including Mercedes-Benz, BMW and Harley Davidson — delivered pre-tax profits of £5.4 million in the year to December 31, 2009, compared to a loss of £2.3m the previous year. The figures look even better when the drop in turnover, down from £295.8m to £273.6m due in large to weaker trading conditions, is factored in. Significantly, interest payments and charges fell from £4.3m to £1.4m. The fall in staff numbers also saw staff costs dip from £21.1m to £20.3m.

"Both the new and used vehicle markets remain highly competitive," the directors said in their report. "Used vehicle values have stabilised as overall stock values have reduced to a point where some confidence is returning to the market."

During last year the company relocated its BMW and Mini franchises to new premises at its car village development at Newbridge, Edinburgh, and as a result saw an increase in sales and improved customer satisfaction.
Development at the Newbridge site is scheduled to continue with a large new facility already planned. The directors emphasised additional finance facilities have already been secured.

In addition to positive reports from its Mercedes-Benz commercial vehicle franchise which "continues to improve", Eastern highlighted one of its main areas of growth will be the expansion of sales to corporate customers and of low CO2 and alternative fuel vehicles "as industry commentators believe this market will enjoy growth in 2010 and the years ahead."

Jim McGill