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Drive Motor Retail delivers 117% rise in profit before tax despite revenue dip

Chris Roberts, managing director, Drive Motor Retail

Drive Motor Retail has delivered a 117% rise in profit before tax despite a 3.3% dip in revenues in its annual financial results to December 31, 2017 - following the sale of freehold property.

The Leicester-based AM100 group said that it had delivered performance which was “considerably ahead of the national market for the Vauxhall franchise” with a turnover of £214.7m (2016: £222m) matched to profit before tax of £8.3m – up from £3.8m in 2016.

Gross profit rose by 5% to £6.7m (2016: £2.3m) at the group, which operates 13 dealership sites across Aldershot, Bristol, Bury St Edmunds, Hartlepool, Haverhill, Leamington Spa, Leicester, Nuneaton, Redcar and Weston-super-Mare.

But although parts sales increased by 13.2% (10.3% like-for-like) and body shop turnover increased by 14.2% during the reported period, the group also realised a mone-off profit boost from the disposal of freehold property - amassing an additional profit of £5.96 million.

A statement issued within the annual financial results said: "The group had a successful 2017, with overall profit at a record level.

"The new car market is challenging with retail car volumes down on 2016, however the group's performance is considerably ahead of the national market for the Vauxhall franchise.”

The group reported that it had continued to exercise its “tight controls over costs, margins and stock” during the period and managed to counteract the effects of a 3.3% reduction (10.1% like-for-like) in retail new car sales and a 20.7% decline in fleet volume.

While service hours rose by 3.8%, they saw a like-for-like decline of 4.8%, a trend blamed on the high warranty volumes experienced by the Vauxhall brand.

The group’s statement said: "Workshop retail hours saw an increase on 2016 underpinned by historic and continued strong sales of service plans.

"Parts trade business continues to be competitive, however we grew this area of business in a number of key areas, especially through increased body shop volumes.

"Our body shop business continues to flourish and during 2017 we won a number of new contracts rewarding our efforts and investments in this department.”

It added: "In summary, the group had a very good year, returning profits well ahead of our peer group in terms of return on sales and capital employed.

"The directors are pleased with the performance during the year and believe that the group is in a strong position to continue its track record of excellent profitability.”

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