Pendragon has projected full-year financial results delivering a further 17.2% decline in underlying profit before tax in an interim management statement revealing declines in turnover and profit during Q3.
Adding some detail to the profit warning issued by the former AM100-topping retail group last week, today’s (October 26) statement stated that group revenues had declined by 7.2% like-for-like in the three month period to September 30 as underlying profit before tax of £1.1m represented a £3m increase on Q3 2017.
Despite the continued decline in revenues and profits, the group insisited that it was “encouraged” by its Q3 performance.
It said: “Given the introduction of the WLTP legislation in the new car business and our continued investment in our used car business in new start up locations and ‘used car factories’, this has had a short term dilutive effect on profitability.
“We anticipate that our full year underlying profit before tax will be approximately £50m.
“We are encouraged by the improving used performance across the group in quarter three of this year and this will be a key growth area for the business in 2019.”
On a like-for-like basis Pendragon’s used vehicle revenue declined by 6.3% as gross profit rose by 13.7% in what the group described as “strong recovery” in margins during the period, from 5.7% to 6.9%.
Revenues from new vehicle sales declined by 9.1% like-for-like and were impacted by the WLTP changes, according to Pendragon’s statement, as gross profit remained flat despite an increase in margin from 6.5% to 7.1%.
Aftersales revenue have declined by 2.9% like-for-like as gross profit declined by 2.4%.
Leasing revenue declined 6.6%, meanwhile, as gross profit for this part of the Pendragon operation rose by 17.9%.
Pendragon chief executive Trevor Finn has focussed the group’s efforts squarely on achieving growth in used cars and its Pinewood Technology software division, which specialises in DMS systems.
Q3 did succeed in delivering growth for the group’s software business. Revenues rose by 5.1%, with gross profit up by 2.9%.
Pendragon said that it had maintained a robust balance sheet with net debt against underlying EBITDA remaining below its target range of 1.0 to 1.5.