7th Oct 2021 09:29
(Alliance News) - Pendragon on Thursday upgraded full-year guidance as car supply issues continue to help bolster margins.
It now expects underlying pretax profit for 2021 to be around GBP70.0 million, up from a prior guidance range of GBP55.0 million to GBP60.0 million previously.
Shares in the car dealership were 5.1% higher in London trading on Thursday morning at 18.40 pence each.
While supply issues have resulted in a reduction in the number of new vehicle deliveries achieved, margins have remained strong and helped to mitigate the volume shortfall. It also noted "unprecedented tailwinds" in used car margins.
The level of new vehicle order-take "remained robust" in the third quarter and was above the same period last year, Pendragon noted. However, supply problems combined with lower inventory levels resulted in a reduction in the number of vehicles delivered.
"Whilst we also continue to expect a realignment of used vehicle margins over time, we expect these to remain strong for the remainder of this financial year, providing us with some mitigation to lower new vehicle volumes in particular," said Pendragon.
Rivals Lookers and Marshall Motor lifted their outlooks on Wednesday amid strong car margins.
Looking to the final quarter, Pendragon cautioned that potential further disruption to supply chains could be caused by Covid-19 and that the impact from ongoing shortfalls in both new and used vehicle supply would persist for the remainder of the year. Although a realignment of used vehicle margins is anticipated by Pendragon, these are expected to remain strong for the remainder of the financial year, providing the group with some mitigation to lower new vehicle volumes.
By Will Paige; [email protected]
Copyright 2021 Alliance News Limited. All Rights Reserved.
Related Shares:
PDG.L