Pendragon is expecting its full year performance to be ahead of expectations followings its Q3 interim management statement.
The top AM100 group said profits have increased for new car sales, used car sales and aftersales. However, the group is predicting modest growth for aftersales and new car sales in 2014 and a flat used car market.
Retail labour sales across Pendragon’s dealerships saw a 2.9% increase in Q3 and overall gross profit increased by 6.4% on a like for like basis. The group recorded a 17th successive growth in volume for used car sales in Q3, with like for like used units up by 9.7%, with year to date growth up 8.9%. Pendragon’s interim statement said gross margin on used cars remained stable in the period.
Pendragon’s new car retail volumes increased by 19.4% and its overall new volume increased by 15.6% year to date to September 30.
The group’s used car supermarket business Quicks recorded a small increase in volume in Q3, offset by a slight decline in margin. Overall, the year to date loss in this business is £1.6m less than the prior year.
Pendragon’s statement to The City said: “Conditions have been favourable this year. While the outlook to next year remains promising, we expect that aftersales recovery, driven by new car sales, will continue to be modest and the used car market will remain broadly flat.
“The SMMT’s expectation for new car sales in 2014 is expected to be updated shortly; currently the SMMT predict a growth rate of 1% in 2014.
“Profitability in 2013 is expected to be materially ahead of expectations for the full year and we are cautiously optimistic about the prospects for 2014.”
Mike Allen, Panmure Gordon executive director, equity research, support services, said: “Pendragon has delivered a strong interim management statement consistent with other operators in the sector at present.
“Market conditions have been strong across the board in new, used and aftersales prompting us to upgrade our 2013 estimate for earnings per share (EPS) by 10%.
"For 2014E we have applied a smaller upgrade of 3% as we would anticipate a strong Q1 2014E given the improving UK economic backdrop. We have maintained our 2015E forecasts for now given visibility across the industry remains notoriously limited."