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Caffyns blames WLTP effect for 3.1% decline in 2018 turnover

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Caffyns has blamed a 3.1% decline in turnover in its 2018 financial results on WLTP’s impact on the supply of vehicles from certain car manufacturer brands - with Audi “significantly constrained” by the new regime.   

The Eastbourne-based AM100 PLC group recorded £209.2 million revenues in financial results for the period to March 31, 2019, alongside underlying profit before tax of £1.45 million – up 4% on 2017’s £1.39 million.

However, on a non-underlying basis a pre-tax loss of £428,000 resulted from “several non-underlying items”, the most significant of which was a £0.9 million charge for equalising the Guaranteed Minimum Pensions for the male and female members of our closed defined-benefit pension scheme, it said.

The biggest impact on turnover, however, was a 10% decline in new car sales for the group.

In its annual financial statement, issued by the London Stock Exchange, it said: “Our new unit sales fell by 10% on a like-for-like basis as one of our principal manufacturers implemented an agency sales arrangement for certain classes of new car sales from April 2018 and also from the negative impact of WLTP.

“Excluding this one manufacturer, our new car sales would have shown growth of 2.2% against the prior year.”

Caffyns chief executive, Simon Caffyn, explained that the decline had come as a direct result of the introduction of the Worldwide Harmonised Light Vehicle Test Procedure (WLTP).

He said: “The year under review produced a 4% headline increase in underlying profit before tax to £1.45 million (2018: £1.39 million) although the story for the year was more nuanced.

“At our half-year stage, I highlighted the adverse impact on our brands that arose from the new emissions-testing regime, the Worldwide Harmonised Light Vehicle Test Procedure, commonly referred to as WLTP, which created a scarcity of supply of new cars for most of our brands.

“This was quickly rectified for some brands but, for others, the impact lingered well into the second half of the year and was a significant drag on both turnover and profits.”

Caffyns’ revealed that Audi was the worst-hit of the brands impacted by WLTP.

The group’s annual financial reports stated that its Audi businesses had experienced “a very difficult year” with new car supply “significantly constrained” as a result of WLTP.

The Audi brand reported a national 34% fall in registrations over the following seven months to our year-end at 31 March 2019, it reported.

Despite the declining new car sales, Caffyns’ board declared an unchanged final dividend of 15 pence per ordinary share.

Together with the interim dividend of 7.5 pence per Ordinary share (2018: 7.5 pence) paid during the year, the total dividend for the year will be 22.5 pence per ordinary share (2018: 22.5 pence).

Caffyn said in his statement that areas of the business that had not been impacted by the effects of WLTP the group had achieved “good growth” in 2018.

Used sales volumes grew by 5.9%, and were accompanied by a growth in margin, as service and parts revenues rose by 7.7% and 7.3%.

Overall, Caffyns said that it remained cautious about the outlook for the year ahead and remained dependent on the key months of September and March.

The group said that it had delivered strong performance in the registration-plate change month of March, but added: “The vehicles emissions regime will undergo further change in September with the implementation of Real-Driving Emissions (RDE) although we are hopeful that any constraint on new car supply will be considerably less than that caused by the implementation of WLTP in September 2018.

“Our balance sheet is appropriately funded and our freehold property portfolio is a source of stability.

“We remain confident in the longer-term prospects of the Company and are ready to exploit future business opportunities.”

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