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Profits up at Pendragon for Q3

Pendragon CEO Trevor Finn

Top AM100 dealer group Pendragon has reported underlying like-for-like pre-tax profit increase of 6.6% over Q3 in its latest interim update.

The group reported a used gross profit increase of 15.2% on a like for like basis, aftersales gross profit increased by 3.8% on a like for like basis and new car sales gross profit increased 5.3% on a like for like basis.

Trevor Finn (pictured), Pendragon chief executive, said: “We continue to go from strength to strength after another strong quarter across our key sectors of aftersales, used and new.

“We continue to deliver on our winning strategy of offering choice, value, service and convenience to our customers and we are ideally positioned to gain from favourable underlying market conditions for aftersales, used and new. The performance of the group is in line with expectations for the full year, which were upgraded in August.”

The group said online visits to Stratstone.com and Evanshalshaw.com increased by 35.9% over the last nine months, which directly contributed to Pendragon’s used and aftersales activity levels.

Aftersales was the largest profitability contributor to Pendragon’s gross profit.

The group stated that it is benefiting from the increased new vehicle supply which continues to increase the less than three year old car parc and the four to six year old car parc. Pendragon has also been using video technology to let customers view vehicle service and repair issues on their smartphones.

The company’s used car profit was boosted by the new Move Me Closer ‘click and collect’ concept that lets consumers order their used car online and collect at the dealership. Pendragon is continuing to invest in marketing the concept to build further growth.

New car gross profit was the third largest contributor to profitability in the quarter. Year to date the group has invested £21.8m in its franchise facilities including expenditure on refurbishment work, relocation of sites and acquisition of freehold interests.

Pendragon is expecting the new car market for 2015 to run to 2.6 million units after analysing the September registrations performance and that size market is the “natural level” for the UK.

Finn said: “As the largest automotive retailer in the UK, we are focussed on our winning strategy and continue to build market share in our key markets.

“We are well positioned financially and strategically to continue to be the largest and leading automotive retailer in the UK.  We expect 2015 full year performance to be in line with expectations.”

Analyst view

Mike Allen, Zeus Capital head of research, said: "Pendragon has delivered a strong IMS showing good growth across the board.

"We are not changing our forecasts following an earnings upgrade in August, but think are forecast assumptions are conservative. The stand out performance is in used cars with LFL revenues +15.2% as it continues to benefit from its online presence and marketing initiatives.

"Its performance in aftersales and new cars was also encouraging showing outperformance vs. the industry on both fronts.

"We would expect this statement to be taken well this morning, particularly in light of recent share price weakness on the back of the VW scandal. Pendragon has marginal exposure in Seat, but has no material exposure."

Pendragon financial figures from Zeus Capital 2015

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