Bodyshop group Nationwide Accident Repair Services held revenues flat at £172.9m in 2011 but saw profits decline after a significant drop in lucrative cosmetic repair work.
The company, which operates a chain of more than 60 accident repair centres plus claims management services for fleets and insurers, said it was forced to take prompt cost-cutting action in the second half of the year as trading conditions deteriorated.
The group reported a statutory pre-tax loss of £2.6m, compared with the previous year’s £6m profit. However that was largely due to £8.1m of one-off costs reflected in its closure of eight under-utilised bodyshops, which is expected to generate annualised savings of £1.9m.
Underlying profit before tax, which excludes one-off items, dropped 8% to £5.5m.
Nationwide’s chairman Michael Marx said it was a robust performance with creditable underlying results. He added: “The decisive action we took in the second half to reduce the cost base was the correct response to position Nationwide appropriately for the future and while we have cut back, we have preserved overall capacity.
"At the same time, we are continuing to invest for long term growth both in our core insurance market as well as our newer fleet and retail markets.
“The overall market for repairs (both insurance-funded and fleet and retail) remains substantial and Nationwide has the infrastructure in place to build market share across all three sectors.”
The group has a strong balance sheet with net cash of £8.0 million and good cash generation, he said, so while trading will remain challenging in 2012, the board believes the medium and long term prospects of the group are positive.
Chief executive Michael Wilmshurst said the strategy to grow overall market share by selling services direct to the fleet and retail markets is proving a successful and key driver for future growth, with strong progress in these sectors helping to offset the weaker insurance volumes.
Nevertheless, insurance-led repairs remains core, and since the year end Nationwide has been appointed by Hastings Direct as sole provider for all vehicle repairs, nearly doubling the size of its existing contract with the insurer.