Pendragon’s profit before tax total slipped to a £44.4m loss in 2018 as revenues declined by 2.4% to £4.63bn in its annual results to December 31, 2018.
The AM100’s former top-placed car retail group incurred the deficit after writing down the value of its assets to the tune of £95.8m.
In its annual results statement, published today (March 12), the group said that the action was necessary "following assessments of the carrying value of those assets which have been calculated by taking into account trading and market conditions on future cash flows'".
Pendragon said that it remained committed to a three-year plan to reduce the capital deployed its premium brands and had completed the sale of six premium brand franchises (including two in February, 2019) for a total consideration of £11.4m – avoiding £25.5m capital expenditure in the process.
However, outgoing chief executive Trevor Finn blamed a period of new car sales affected by “macro newsflow” for the group’s stalling financial performance.
The period saw new car revenues decline by 3.8% in total (5.2% L4L) as gross profit fell 8.3%.
Aftersales revenue declined 1.8% in total (0.5% L4L), with gross profit down 1.5% amid falling margins, meanwhile, as the group’s leasing business as leasing revenues declined 11.7% on both a total and like-for-like basis.
The company declared a final dividend of 0.7p per share bringing the full year dividend to 1.50p per share.
Despite the group’s challenges, Finn claimed that Pendragon had “seen strong performance in used cars in the second half of the year, with the transformation of preparation facilities and processes now embedded in our car stores”.
Pendragon’s used car sales revenue declined 0.9% (0.3% L4L), however, despite growth its online business which has seen visits to Carstore.com, Evanshalshaw.com and Stratstone.com up 5.1% to 28.7 million visitors from 27.3 million visitors in the prior year.
Finn said: “New car sales have been subdued and consumer confidence has been adversely affected in the period by macro newsflow.”
“However, our Software business is continuing to win market share and has now deployed systems in twelve overseas countries.”
Revenues realised from Pendragon’s Pinewood DMS software division climbed 7% - in both total and like-for-like terms – as gross profit from the division rose by 8%.
Pinewood still accounts for just 0.4% of the group’s total revenues, however, at £16.9m.
Pendragon now operates 32 used car only Car Stores and 177 franchise points.
In 2018 its continued investment in Car Stores delivered the opening of three purpose built used car facilities in the first half of the year.
In the second half of the year Pendragon closed former new car franchise dealerships, to repurpose and open the sites as Nottingham Car Store, Stoke Car Store, Borehamwood Car Store and Swansea Car Store.
The group also opened four dedicated “used car refurbishment factories” in 2019 to industrialise this process.
The group said in its results statement that the shift towards the new strategy had “impacted used revenue growth and profits”, but its added that it would deliver growth in the longer term.
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