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Pendragon sees profits increase in 2012

Top AM100 group Pendragon saw turnover increase by 5% to £3.63 billion and profit before tax rise by 58% from £24 million to £37.8m in 2012, which analysts believes indicates a recovery of the automotive market.

Despite the improvement in PBT and turnover, operating profit at the 240 franchise point group was down by 13% from £78m to £67.9m.

Pendragon has also revealed the appointment of its new chairman with its full year results. Mel Egglenton will take up the role of chairman for the group from May 22.

He succeeds Mike Davies, who will retire from the board and as chairman at the May 22, 2013 AGM after eight years as a non-executive director.

Egglenton joined Pendragon in December 2010 as an independent non-executive director. He is a chartered accountant and a former partner in KPMG. As a member of KPMG's board he chaired that firm's UK Audit Committee and subsequently also occupied the role of UK senior independent partner.

Egglenton is also non-executive director of and adviser to a number of private companies in the UK. He is considered by the board to continue to be independent.

Mike Allen, Panmure Gordon executive director, equity research, support services, said: “Pendragon appears to be seeing signs of market recovery across the board in line as reported elsewhere in the sector, with its adjusted PBT ahead of our expectations.

“Underlying EBITA was below last year but ahead of our forecasts showing signs of pricing pressure in some parts of the business.

“Net debt continues to fall YOY but was trending higher than our forecast, with the dividend lower than our forecast. We are maintaining our forecasts for 2013E and 2014E at the lower end of the consensus range ahead of the analyst meeting, and maintain a sell recommendation with our stock selection preferences lying elsewhere in the sector.”

Stratstone, Pendragon’s premium brand division, performed ahead of analysts’ forecasts, but overall gross profit per unit did fall year-on-year with used car margins also falling during the course of the year.

Pendragon’s volume brand business Evans Halshaw also performed slightly ahead of forecast expectations with overall gross profit per unit marginally ahead of last year with new and used like-for-like volumes up by 10% and 7% respectively.

Aftersales gross profit did fall by 4% on a like-for-like basis on the back of falls in new warranty work.

The light van market saw a decent recovery during the course of the year within this. Used car supermarket brand Quicks generated a loss in 2012 but its performance did improve by £0.6m to an operating loss of £3.8m during the period and now operates from seven sites.

The performance from dealer software business Pinewood and Quickco were slightly below analyst expectations but were more than offset by gains from Pendragon’s contracts and leasing business.

Trevor Finn, Pendragon chief executive, said: "The group has performed strongly in a recovering vehicle market and, and continue to enhance our online performance.

"Having strong brands and online presence is key to success in the retail market. It is therefore pleasing that website visitors have increased by 18% in the year and by 87% in the last three years. The continued investment in our online strategy has established a strong platform for the business.

"The group is encouraged by the improvement in the used and new vehicle departments and remains on track with its debt reduction targets. The group had a strong second half in 2012 and is well positioned for 2013."

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  • Murray - 20/02/2013 19:25

    How long can investors tolerate the results from Quicks? 3 years of losses. Almost 4m loss in 2012 is more than 10% of the result and worse last year. Shareholder dividend could have been better. Time for change at the top. AGM will not approve big rewards for this performance compared to peer groups.

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