First half profits improve for car dealer Pendragon
A STRONG operational and financial performance together with a successful £75m rights issue have helped to boost the first half for Midlands based car dealership group Pendragon.
The firm, which serves both the prestige and volume markets, saw a 12.7% increase in underlying profits during the period when compared to last year, despite a fall in revenue.
The news boosted investors with shares up in early trading.
Trevor Finn, chief executive, said: “The first half of 2011 has been an exciting period for the Group. Pendragon has successfully completed the raising of £75m from a Rights Issue, extended the maturity of its banking facilities on better terms and implemented a Pension Deficit Reduction Plan.
“The recapitalisation of the group and the revised banking facilities provide greater strength and flexibility for the future.”
He said the success of the group’s operational initiatives had again helped its aftersales and used businesses in what remained a challenging macro-economic environment.
“Overall, Pendragon continues to perform in line with the board’s expectations for the full year,” he added.
Pendragon is the largest independent operator of franchised motor vehicle dealerships in the UK. The group operates 237 franchise points, of which nine are in California. It also sells and services a broad range of new and used motor cars and commercial vehicles and has a substantial presence in the UK vehicle leasing, wholesale parts and dealership management system markets.
Its Stratstone network specialises in prestige vehicles, while its Evans Halshaw brand serves the volume car market. Chatfields is Pendragon’s commercial van and truck business, selling and servicing vehicles within a range of commercial vehicle brands. The California operation specialises in high-end brands such as Aston Martin and Jaguar Land Rover.
In the first half, underlying pre-tax profit increased to £17.7m from £15.7m last year, aided by a strong recovery in the Evans Halshaw division and increasing demand at its California business.
The performance of the Stratstone division was below 2010’s strong first half. However, it said new models such as the Range Rover Evoque and a new Jaguar XF were expected to boost the second half.
Aftersales remains a key area for the group, as it is still the most profitable business. The group said the performance of the aftersales department had been impacted by a reduction in warranty work and the nearly-new sector following a reduction in new car registrations since 2008. However, despite these conditions, Pendragon’s aftersales gross profit remained broadly flat, down just 0.9% on a like for like basis.
The group said the used vehicle market represented a significant opportunity for growth, with the national market comprising 6.9m units currently with signs of recovery.
Pendragon continues to significantly outperform the market for this sector with like for like used car volumes rising by 13.2% compared to last year.
Overall the business has achieved an underlying operating profit of £42.5m (2010: £40.1m) and pre-tax profits of £18.2m (2010: £13.3m). Underlying basic earnings per share were 2p for the period compared to 1.6p in 2010. As a result of improved cash generation the group has reduced net borrowings by £51.8m since June 2010 to £294.9m.
