PBT and EPS fell due to investment in used sales and lower margins on new car sales
Companies: Pendragon PLC
Shares in Pendragon fell 4% as the market opened on Tuesday after the Automotive retailer announced mixed full-year results showing revenue growth of +6.1%, operating profit growth of +2%, but lower pre-tax profits and EPS.
The Group, which owns and operates several national car dealership brands, said it is investing heavily in shifting its focus to used car sales, which it sees as the greatest opportunity for growth, and it blamed the Yoy fall in profits on this investment and lower margins on new car sales.
Used vehicle revenue jumped nearly 10% on an LFL basis, while aftersales revenue rose 7.3%. This is quite a contrast to new car sales, which rose 3.1% LFL but fell 1.4% on a total basis.
Pendragon's Board said it would pay out a final dividend of 0.75p/share, with the total divi at 1.45p/share, up 12% on the previous year.
CEO Trevor Finn said he believed the firm could achieve at least double-digit growth in used revenue in 2017, with the firm's aspiration over the next five years to double used vehicle revenue. He said that to do this, the Company needed to invest in inventory and adjust its algorithms and marketing:
"Our underlying profit before tax has increased by 7.6% in the year as our growth continues. The Group has doubled underlying profit before tax in four years as a result of our clear strategy of offering choice, value, customer service and convenience. Future growth will be driven by our initiatives, our investment in additional physical capacity for used car sales and by our strategic advantages in IT and intellectual property...
The early results of this are very encouraging. Our growth in used vehicle revenue on a like for like basis in January 2017 exceeded the increase required to achieve our growth aspirations."