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Pendragon profit to be"comfortably ahead of expectations" in 2014, says board

Pendragon, the UK's largest car dealer group, says it expects its 2014 underlying profits to be comfortably ahead of expectations after a strong first quarter trading.

In an interim management statement to the London Stock Exchange, chief executive Trevor Finn said: "The key areas of our business are performing ahead of expectations in the first quarter of 2014.  Our profits have again grown in our used and new vehicle and aftersales departments. An improvement in operating leverage boosted the bottom line.

"The highlight of the quarter is our market leading internet position in the used vehicle sector, as we achieved a 19th successive quarter of growth in used volume, coupled with an increase in margin.

"We therefore expect our 2014 underlying profit to be comfortably ahead of expectations for 2014."

In Q1, its market leading internet position in the used vehicle sector has delivered improved gross profitability of 19% (like for like), contributing to nearly half of the gross profit improvement of the group in the period, the statement said.

Aftersales gross profitability has increased by 6% (like for like) resulting from self-help initiatives, such as value servicing, service plans and vehicle health checks, and the continuing upward market trend. Retail labour sales rose 3.6%.

New car gross profitability has increased by 13% (like for like), while sales increased 9.3% (retail up 6.4%).

"We are seeing the positive impacts of the investment in our business model transformation expensed in 2013 which has benefitted operating leverage in quarter one 2014. Gross profit has grown by 12.5% in the period but our operating profit has increased by 30.5%," said the statement.

Pendragon expects to have 15 million visitors to its Stratstone, Evans Halshaw and Quicks websites by year-end, which will be double the number recorded in 2010.

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