18th Mar 2020 10:40
(Alliance News) - Automotive retailer Pendragon PLC on Wednesday said an improved second-half performance was unable to offset difficulties in the first six months of 2019.
Pendragon's revenue for 2019 was 3.8% higher on a like-for-like basis at GBP4.51 billion, though on a reported basis the figure fell 2.6%.
Pendragon has posted a pretax loss of GBP16.4 million, after a profit of GBP47.8 million the year before. Profit was hurt by the clearance of used car stock from excess levels as well as a fall in the value of used cars in the UK.
The company has decided against a final dividend for 2019, having also not paid one at the half-way stage. For 2018, it returned 0.7 pence per share to shareholders.
Pendragon's Car Store business sold 27,866 used cars in 2019, up 13% like-for-like but down 2.0% reported. Franchised UK Motor used car sales fell 2.1% like-for-like and 6.0% reported to 135,207, while US Motor fell 1.1% like-for-like and 5.7% reported to 165,571 used cars.
New car sales fell 0.1% like-for-like and 2.4% reported in Franchised UK Motor to 81,423, while in US Motor new car sales rose 1.7% like-for-like but fell 13% reported to 6,075.
Overall, Pendragon's used car sales were 1.1% lower like-for-like and 5.7% lower reported. New car sales were flat like-for-like and 3.2% lower reported.
"Financial performance in the first half was impacted by a combination of issues, with the principal driver being the impact of the clearance of used car stock from excess levels," said Pendragon.
"The second half performance improved as a result of actions taken by management to re-set performance, which included the closure of 22 underperforming Car Store locations, better management of used vehicle inventory and a clear focus on operational cost management."
"The improvement in performance during the second half puts the business on a much stronger footing for 2020," added the firm.
Turning to Covid-19, Pendragon noted some manufacturers are shutting down facilities, though there are inventories that can last several months. There should, therefore, be no disruption to new car supply before the autumn.
However, financial performance could be hurt by customers not visiting dealerships.
"We have modelled the impact of a severe reduction in vehicle sales over a sustained period on our financial covenants and bank facility limits and we are comfortable that we are well-positioned in this regard, with mitigants available in the more severe scenarios where headroom becomes more limited," said Pendragon.
"However, we have taken some additional protective measures such as deferring commitments in our capital expenditure programme, increasing the flexibility we have in our marketing spend and closely monitoring inventory levels."
Shares were down 13% on Wednesday morning in London at 5.23p each.
By George Collard; [email protected]
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