Car dealership giant posts first half loss as pandemic hits trade
Pendragon, the Nottingham-based car dealership giant, has posted a first-half loss after the Covid-19 crisis hit the business, resulting in a 50% drop in revenue.
The company posted pre-tax losses for the six months to the end of June of £41.4m compared to losses of £129.6m year-on-year, while revenue plunged 50% to £1.22bn.
Pendragon, which confirmed in May that its pre-tax profits took a £10m hit during the first quarter of the year because of the Covid-19 pandemic, said the crisis had a material impact on its reported underlying profit before tax performance, with management estimating the financial impact on H1 FY20 to be around £44.1m.
However, the company said performance has been strong in the first two months of Q3 trading with July and August making a combined underlying profit before tax of £7m, up £19m vs FY19 (Jul/Aug FY19: £(12)m loss, Q3 FY19: £3m profit).
It added that September performance to date has been strong and in line with expectations.
In July, Pendragon revealed plans to cut 1,800 jobs and close 15 stores while at the start of September it outlined a three-point plan to transform the business and target an underlying pre-tax profit of between £85m and £90m by its 2025 financial year.
Bill Berman, chief executive, said: “The Covid-19 pandemic has had a significant impact on our business during the period, however, thanks to the agility, hard work and commitment of our people, we have performed resiliently. The safety of our colleagues and customers has been our priority throughout. I am particularly proud that despite these circumstances, we have risen to the challenge in responding to the new environment and accelerated improvements in our digital and online retail capabilities.
“We’ve been encouraged by the first few months of trading following reopening and, while the outlook for the remainder of the year remains uncertain, we are confident the operational improvements we have made leave us well-positioned for the long-term. We recently set out our new strategy with digital innovation and operational excellence at its core. Both will be instrumental in transforming Pendragon’s performance and we have made great progress in both areas already this year.
“While there is some distance still to travel, we remain firmly committed to achieving our twin goals of sustainable profit growth and attractive returns for shareholders.”