PDG profits down on extra costs

The UK’s largest auto retail group, Pendragon, has increased revenue in 2012 by 5% on the back of a growing new and used car market but seen operating profits fall back due to increased operating costs.

The group told shareholders that turnover was just under £3.64bn in the year to December 31, 2012 against just under £3.47bn in the prior year. Operating profit, at £67.9m, was down by 13%.

Pre-tax profits are up by 58% to £30.1m, largely due to greatly reduced one-off fees around the group’s refinancing in the previous year and subsequent reduced interest charges.

The figures were slightly below expectations and some analysts described the lack of growth as ‘disappointing’ given the market conditions.

However, precise year-on-year comparisons are difficult to make because, in 2011, Pendragon treated its start-up used car supermarket business, Quicks, as an exceptional item whereas, for 2012, it is now included within the underlying business.

Quicks turnover in 2012 was £46.9m and it made an operating loss of £3.8m which was a £0.6m improvement on 2011. The company said that, in the second half of 2012, Quicks performed £1.6 million ahead of the prior year and “is continuing on this upward trajectory”.

 

 

 

Chief executive, Trevor Finn, said that on a like for like basis, the group had increased used vehicle margin to 10.0% from 9.7% but new vehicle margin was 7.8% in the year versus 7.9% in the prior year. This was due to increased lower margin fleet business, with retail new margin up to 10.6% from 10.3%.

Overall gross margin for the group fell from 13.7% to 13.2% due to the relative mix of used, new and aftersales levels.

Pendragon continues to push down its debt which reduced by £30.4m in the year to stand at £216.4m at the end of the year. The group said it remains on course to achieve its debt target of less than 1.5 times EBITDA by the end of 2014.

Finn said: “The group has performed strongly in a recovering vehicle market. Having strong brands and online presence is key to success in the retail market.

“The group is encouraged by the improvement in the used and new vehicle departments and remains on track with its debt reduction targets. The group had a strong second half in 2012 and is well positioned for 2013.”

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