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Bullish Pendragon hunts

Pendragon, confident of raising turnover and profit in 2005 despite the decline in the new car market, is planning to buy many small motor retail businesses.

“There are lots of opportunities at the moment,” says Trevor Finn, chief executive. “We are looking at businesses whose owners want to leave motor retailing.”

In its first-half results to June 30, Europe’s largest motor dealer group reported turn-over up from £1.598bn to £1.751bn. Profit before tax and exceptionals rose from £30.8m to £36.8m.

“We’re outperforming the market because of the way we run the business,” Finn says.

“We have the right range of brands, activities and new technology systems to improve retailing efficiency, so we can produce good results in a tougher market.”

Pendragon has closed MG Rover dealerships in Leamington Spa, Chelmsford and Luton, and the sites will be sold for a mix of residential and commercial property development. Other MGR sites are likely to be refranchised.

Finn says Pendragon sold its Mercedes truck operation in June under an agreement with the manufacturer, which took a long time to complete.

Tim Richmond, of Arden Partners, Pendragon’s stockbrokers, says the group is ahead of last year’s first-half but the 19% rise in profit before tax is “slightly misleading” because of the CD Bramall acquisition and changes in international accounting procedures.

“Adjusted, before-tax profit is up about 2%, which is a strong performance in the current climate,” says Richmond.

“The group made an operating profit of £2.5m on MG Rover in the first half of last year, and lost £1.5m this time through redundancies and warranty payments it never received.

“That’s a swing of £4m, and above provision made, but it will more than make up for it through the sale of former MGR dealerships.”

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