Market analyst Zeus Capital has predicted a strong set of financial results amid deteriorating share prices for Pendragon – a week before the group issues its official 2015 accounts.
Zeus is forecasting 7.9% year-on-year growth in revenues with profit before tax rising to £68.7 million from the £60.2 million achieved last year, despite share prices that have been weak year to date, and now "at the bottom of its 12 month range", it reported.
Pendragon is also expected to record an acceleration in net debt reduction, with a £73.8 million comparing favourably to the £108.8 million recorded 12 months earlier.
Zeus Capital analyst Mike Allen said: “It would be interesting the extent to which this net debt reduction has been driven by dealership disposals as we note a number during 2015 with Land Rover, Jaguar and Honda.”
Allen’s report said that the supply growth of cars up to three years old has led to more cautious predictions for used car sales performance.
It added: “It will be interesting to see if the strategy has changed going into 2016.
“We expect the volume push in new cars to continue, and note strong SMMT data for January suggesting the strongest market since 2005 albeit with relatively high levels of self-registrations still prevalent in our view.”