Pendragon to be loss-making in 2019
12 June 2019
Pendragon is expected to be loss-making in its current financial year, according to a stock market statement from its new management team.
Led by chief executive Mark Herbert, who joined Pendragon earlier this year, a review of the business has found “challenging market” conditions and the board “now expect group underlying PBT for full year 2019 to be a small loss, with the first-half of FY19 expected to be significantly loss making ahead of returning to overall group profitability for the second-half”.
Mr Herbert highlighted the areas impacted greatest, citing accelerating losses in the Car Store used car operation due to excess stock and falling residual values, shrinking margins on new car sales and increasing aftersales costs.
Commenting on the Car Store operation he added: “We expect to see the losses of £11.9m incurred in FY18 accelerate to c.£25m during FY19, principally as a result of execution inefficiency and the impact of excess used car stock during the first-half.
On the overall Pendragon business Mr Herbert added: “Notwithstanding the challenging market and uncertain macro outlook, the expected loss for the year is still disappointing. That said, we see significant addressable opportunities to improve the business and return to profitable growth. We are continuing to work on our review of the business ahead of our strategic update in September, but I am confident there are real opportunities for self-help that will improve the performance of the core UK Motor and Leasing businesses. In the short-term, there is a need for a refocus of strategy and execution in Car Store but I believe this, together with Pinewood, to be significant long-term market opportunities that we should be pursuing with vigour.”