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Caffyns ‘some way’ from full recovery

Caffyns has completed the strategic restructuring that immediately followed the collapse of MG Rover, says chairman Brian Carte.

The opening of Worthing Audi in September marked the end of physical changes needed since Longbridge’s collapse. But the benefits of the closures and refranchising have yet to show, and more cuts are to come at the south of England group.

Since the end of the financial half year to March, Caffyns has closed a bodyshop in Worthing, its wholesale parts business in Hove and a Vauxhall dealership in East Grinstead. Business will shift to the Tunbridge Wells and Brighton Vauxhall garages and the parts business will be folded into Caffyns wholesale operation at Hailsham.

The East Grinstead and Worthing freehold sites will be sold, and proceeds used to reduce borrowings.

Caffyns’ interims to March 2007 shows that earnings have fallen 12%. Turnover rose to £85.5m from £81.5m, but pre-tax profits, after exceptional items, dropped to £829,000 against £922,000.

Carte repeats his warning of six months ago that benefits are taking longer than hoped to realize. In some cases financial benefits from refranchising could take three years to come through. “We can enjoy our first six-month period free from disruption of refranchising programmes. We are still some way from delivering the full potential of new franchises,” says Carte.

He believes there should be “an improved trading performance for the year”.

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