The revised strategy for the number 12 AM100 group follows a warning to investors to expect a first half loss this financial year, blamed on rising interest rates, falling consumer confidence and soaring costs of operating within the M25 corridor.
Axing franchises such as Audi (4), Chrysler (2), Jaguar (2), Land Rover (4), Mazda (1), Mercedes-Benz (4), Mini (4), Seat (1), Smart (1), Volvo (5), Volkswagen (4) and Volkswagen Vans (1), would reduce the £687m turnover group’s spread from 17 brands and 44 outlets to just five marques at five locations. However, those five in its Specialist Division are its most profitable.
Chief executive Nick Lancaster says: “At the time of our preliminary results announcement on March 23 we stated our intention to undertake a strategic review of all options. This has now been completed and HR Owen is well positioned to focus on fewer key brands and concentrate on the group’s strong and profitable Specialist Division.”
Lancaster refuses to confirm which franchises would be disposed of, but admits they may include some strong brands. “I’m convinced that some manufacturers will have to change their view about supporting dealers within the M25,” he adds.
Funds raised from the disposals will be used to cut debt, with the excess returned to shareholders.
In April this year, AM reported HR Owen had returned to profit following its £3.3m loss in 2003.
The group’s financial results for the year to December 31, 2004, showed a pre-tax profit of £500,000 from turnover of £687m, which had increased from the £534m turnover in 2003. The group hinted then that it might be seeking a buyer for parts of the business and also raised the possibility of a return to private ownership. Lancaster says this is still an option.
For the second year, HR Owen is sponsoring the MPH ’05 car show at Earl’s Court, London, and Birmingham’s NEC. The event, held in November, is hosted by Jeremy Clarkson from BBC motoring programme Top Gear, and is viewed as a strong brand marketing opportunity by HR Owen for its specialist marques.