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HR Owen to downsize further

HR Owen, which announced a loss for 2005 after slimming its business, is to downsize further while developing new initiatives outside motor retailing.

Chief executive Nick Lancaster says: “We want to be a niche operator at the top end of the car business and, coupled with that, we’ll announce initiatives in the coming months. They will be motor-related but outside sales of cars – I can’t say more because discussions are continuing.”

John MacArthur, chairman of HR Owen, says in a results statement for 2005 that all dealerships were trading at a profit apart from the BMW outlets.

Last month, HR Owen announced the reorganization of its BMW network, which included closing a new-build outlet to the west of London.

Retail motor industry insiders are not surprised by Lancaster’s wish to try to contract further. “He’s the last of the petrol-heads running big motor retail groups, and would like to be selling only the biggest and sexiest cars,” says one consultant.

“He has found that BMW is now a volume brand, and its dealers have to sell twice as many for each £1m they want to make.”

Lancaster says “twice as many” isn’t strictly accurate, but accepts that dealers must sell more BMWs, which he believes he can do from his reshaped London network.

He will not say which other brands might leave HR Owen, which has sold its VW and Ford PAG outlets, but the most exclusive brands at the core of his group are Rolls-Royce, Bentley, Bugatti, Lamborghini, Ferrari and Maserati.

An analyst says: “HR Owen has always under-performed, and didn’t make as much money as it should have done in the good years. Lancaster couldn’t raise the cash to buy freehold dealerships and must be facing onerous annual uplifts in rent.”

HR Owen made a pre-tax loss last year of £12.9m after charging goodwill impairment of £6.4m and losses from discontinued business of £1.6m. In 2004, the group made a profit of £1.4m on £686m turnover. Net borrowing (excluding stocking loans) was £28.4m at December 31 (it stood at £23.1m a year earlier).

HR Owen financials 2005

2005 (£) 2004 (£) +/-
Turnover (continuing operations) 535m 561m (26m)
Gross profit 81.9m 84m (2.13m)
Operating profit before exceptionals (827,000) 4.75m (5.58m)
Operating profit (7.26m) 4.75m (12m)
Profit before tax (11.31m) 1.36m (12.67m)

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