Profit before tax (PBT) exceeded expectations, rising 63%, from £27.2m to £44.2m (budget: £35m), while turnover is up 22% from £1.186bn to £1.45bn. Arnold Clark purchased or opened 15 new outlets during 2003, which contributed 8% to the profits increase.
“We expect a similar level of profit this year as we bed down the 2003 purchases,” says Eddie Hawthorne, Arnold Clark managing director. “We bought a couple of small dealerships in the first three months and we do have some plans to expand in Northern England down the M6 corridor later this year.”
Piers Trenear-Thomas, a consultant with Grant Thornton Motor Retail, called the results an “impressive performance”, and praised the 3% PBT return on turnover figure, up from 2.3% in 2002.
“Arnold Clark is a volume business that is selling on price, yet it can generate 3% PBT – that's prestige business returns,” says Trenear-Thomas. “The business is capital efficient. It's not wasting money on pointless acquisitions, and its loans haven't shot up – in fact it's a typical Arnold Clark type of performance.” Arnold Clark, which expects a multi-million pound pay-out from Customs & Excise later this year due to overpaid VAT on demonstrator cars, has dismissed a website set up by a disgruntled customer which accuses the company of poor standards of service.
“He's told us he will sell the site for £25,000, but we won't succumb to that type of extortion,” says Hawthorne. “It hasn't affected our business.”