18th Sep 2019 09:29
(Alliance News) - Car dealer Pendragon PLC on Wednesday reported it swung to a first half loss due to "challenging" market conditions, skipping its interim dividend as a result, and said its non-executive chair will leave the company next month.
Pendragon already was without a chief executive.
In the six months to June 30, revenue fell by 0.8% year-on-year to GBP2.46 billion from GBP2.48 billion. The company made a pretax loss of GBP134.6 million, swung from a GBP27.3 million profit in the first half of 2018.
On an underlying basis, not including impairments costs or severance expenses, the pretax loss was GBP32.2 million, sinking from a GBP28.4 million profit.
The firm also opted not to pay an interim dividend this year, having made a 0.8 pence per share payout a year prior.
Non-Executive Chair Chris Chambers will leave the company the company on October 1, Pendragon said, after six years at the firm. Bill Berman, a non-executive director and former operating chief of American car retailer AutoNation, will become executive chair on an interim basis.
Berman will lead Pendragon's search for a permanent non-executive chair and a new chief executive. Mark Herbert, its former chief executive, departed in June by "mutual agreement".
Turning back to interim results, Pendragon reported like-for-like revenue growth of 2.9%. Like-for-like revenue in the Software business increased by 6.0%, while revenue in the Leasing business grew by 4.9%, "despite challenging conditions in the UK's rental and leasing market", it said.
Pendragon said: "Economic and market conditions are very challenging. The heightened political and Brexit uncertainty, as to both outcome and timing, is adversely affecting customer confidence."
Looking ahead, the company is not anticipating an improvement in market conditions in the rest of the year but said it is "closely monitoring market conditions and customer behaviour", particularly in the month of September, which is a key trading period for the company.
Pendragon now expects its underlying pretax loss to be at the bottom of internal expectations, though it does expects a "meaningful recovery" in profitability during the second half of 2019. The company said it has engaged in various "self-help" measures to improve performance.
During the period, Pendragon sold two franchise locations, in Mission Viejo and Newport Beach both in California, for a combined consideration of roughly GBP60.0 million. It is also in discussion to dispose of its US Motor Group unit.
Outgoing Chair Chambers said: "Whilst market conditions have been challenging in the first half of 2019 with headwinds in both the used and new car markets the group has continued to deliver like-for-like revenue growth. However, there has been a material decline in the group's profitability principally as a result of the actions taken to address excess used car stock.
"We made significant progress reducing this exposure in the latter period of the first-half and we remain committed to the strategy of growth in the group's used car proposition. The business is fully focused on maximising performance, but we expect the market to continue to be challenging during the second half of 2019."
Shares in Pendragon were 10% lower at 9.81 pence each in London on Wednesday morning.
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