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Car dealer group Caffyns breaks back into profit

South of England dealer group Caffyns has hauled itself back into the black.

In an interim statement to the London Stock Exchange, it revealed it had made pre-tax profits of £685,000 in the six months to the end of September compared to the £2.1m loss of the same period in 2008.

Adjusted operating profit had risen to £1.36m from a £1.61m loss.

Revenue has also grown 6% to £89.6m from £84.6m, despite the closure of three dealerships. Like for like revenue was up 14%, reported chief executive Simon Caffyn.

Caffyn added: “We are pleased with the progress made in the first half, where we have successfully achieved a return to profit compared with a substantial loss in the same period last year.

“These results demonstrate that our strategy has proved effective and our car sales have risen significantly. The economic environment remains difficult but, within this context, we continue to focus on our profitability and, in turn, delivering value to all shareholders."

New vehicle unit sales were up 18.2% while used sales were up 15.1%, both on a like-for-like basis.
The group said it has strengthened its systems and processes across the business. More effective internet marketing and focused CRM activity have helped to drive up aftersales revenue 4% and profit 22%.

Cost reductions, including closing three dealerships, has produced £2.5m annual savings, while increased activity in the used car market has kept stock turn at 10.8 and consignment stocks of new cars have been kept low.

The business has also multi-franchised certain businesses, with Ford added to its Brighton Volvo site, Citroen aftersales added to its Peugeot outlet in Sevenoaks, while it merged the management of its Land Rover and Jaguar dealerships in Sussex and two Ford sites in Hampshire and Surrey.

The group also recruited former marketing director of Inchcape Retail UK, Guy Ainsley, as operations director in September.

Caffyn added: “Our strategy remains unchanged. We are concentrating on improving our operational performance and have made good progress so far. Improvements in the final quarter of last year and in the first half of this year are encouraging.

“We remain focused on returning to historic levels of profitability of between £3-4 million of pre-tax income and then to grow sales and profits further on a sustainable basis. We will do this on an organic basis supplemented by acquisition opportunities that can be absorbed efficiently while maintaining prudent levels of gearing.”

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