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Cambria Automobiles profits up 32%

Cambria Automobiles has increased underlying profit before tax by 32% to £4.1 million in its preliminary results for the year ended August 31, 2013.

The dealer group saw revenues increase by 12% to £395.8m and the results were boosted by the strong new vehicle market, with Cambria seeing a 16.1% increase in new car sales.

There was modest growth in Cambria’s used car operations with a 6.5% increase in profit per unit.

Aftersales revenue and gross profit accounted for 14.3% and 45.1% of group revenue and gross profit respectively.

Mark Lavery, chief executive of Cambria, said: “Our buy-and-build strategy to turn around underperforming businesses, executed under exceptionally tough trading conditions, has proved very successful.

“From a standing start in 2006, the group now has 27 dealerships, representing 42 franchises and 17 brands.

“Our strong cash generation provides us with the balance sheet to acquire instantly earnings enhancing businesses, which will strengthen our portfolio mix and help to fulfil our national ambitions to create a group with annual revenues of over £1 billion.”

Lavery said he is confident of maintaining the momentum as the first two months of the group’s financial year were ahead of plan.

Lavery told AM: "It’s a good time to be a car dealer in the UK right now. Manufacturers are supporting the market with strong offers.

“We’ve got a very balanced portfolio now and we’re actually the second largest Aston Martin retailer in the world. We did a good job for Jaguar last year and I’d like to expand further with high premium in the UK.

“We’ve got a healthy amount of cash and we need to use it and make it work for us.”

Lavery said the business is currently working on more acquisition deals. A major focus for the group is its Guest Experience programme, with its training academy driving through Cambria’s businesses process across existing dealerships and new acquisitions.

Guest Experience has already launched its training programme for sales and will be launching a new training programme for aftersales next year.

These initiative are being led by academy general manager David Webb.

Lavery does not expect double digit growth from the new car market next year and expects new car sales to stabilise further.

Cambria acquired County Motor Works and its freehold property this year, adding a further Vauxhall and Alfa Romeo dealership and the group’s first Chrysler Jeep dealership.

The group also completed the refurbishment of its Swindon Motor Park facility for £0.5m.

Cambria has also confirmed that it made a post year end acquisition of the freehold interest in a Fiat and Nissan dealership in Warrington for £2.2m, reducing annual rental costs by £0.2m.

Analyst view

Michael Allen, Panmure Gordon executive director, equity research, support services, said: “We see Cambria as an exciting growth consolidation story, which has a well-balanced business model and has built up its balance sheet from nothing utilising its successful build and buy strategy.

“Results announced today look to be strong with the outlook positive for the foreseeable future.

“New vehicle revenues were 19.5% YOY, with units +16.1% YOY and broadly tracked growth in overall private registrations during the period.

“However, the groups brand partners grew by 9.1% suggesting good outperformance from Cambria. Gross margins did fall by 10bps during the period to 6.7%, and this trend has continued into the new trading period.

“The driver here was an increase in fleet and commercial within the mix. Used cars saw a 1.5% growth rate in units with gross profit per unit advancing 6.4%, which advanced the gross margin 10bps to 9.3%. A focus on F&I was the key driver here along with the tight control of stock. Aftersales saw revenues increase by an impressive 11%, although margins reduced by 100 basis points to 40.8% due to a 16% increase in parts sales, which were at lower margin.

"The company continues to review its processes here to help drive future levels of customer retention. The outlook statement remains positive with trading patterns going into the new financial year ahead of plan and the prior year, which represents a strong comparative."

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