25th Oct 2022 10:10
(Alliance News) - Pendragon PLC on Tuesday reported a significantly lower underlying profit as the company faced increased costs, but said its figures were still in line with company expectations.
In the three months to September 30, the Nottinghamshire-based car dealership chain reported underlying pretax profit of GBP14.7 million, down 41% from GBP25.1 million in the same period last year.
Pendragon said that although overall gross profit was "broadly in line" with the level achieved in the third quarter of 2021, increases in underlying operating costs of about GBP7 million and increase in interest charges of about GBP3 million partially offset the gross figure, delivering lower underlying profit.
Pendragon said while new vehicle volume was down 0.1% in the market as a whole compared to last year, its own new vehicle volume in the new quarter was up 14%.
However, used vehicle volume was down on last year as lower new car production continued to have an impact on used car availability. While gross profit per unit remained "robust" at GBP1,561, this was 24% lower than the "exceptional" GBP2,052 recorded last year.
Aftersales revenue increased 5.0% and the gross margin rate increased to 51.7% from 50.3% last year. The strong performance in new cars and aftersales broadly offset the lower used car volume and anticipated decline in used car margins.
Beyond the UK Motor division, both the leasing and software businesses delivered "good performances".
Looking forward, the company noted that while it expects both new and used vehicle supply shortfalls for the last quarter of 2022 and into 2023, the new car order bank remains well above historical normal levels at over 20,000 at the end of September. It expects underlying pretax profit to be in line with expectations for the year.
Chief Executive Officer Bill Berman said: "We are encouraged that the momentum we saw going into the second half has continued throughout the third quarter. Our agile and diversified business model positions the business well to respond to the uncertain environment, as demonstrated by the outperformance in new vehicles and the strong margin profile of the broader UK Motor division. While supply chain challenges and other market pressures are set to persist, we are confident we have the right strategy in place to deliver for our customers and partners, and to meet our expectations for the full year."
Shares in Pendragon were trading 1.1% higher at 27.20 pence each in London on Tuesday morning.
By Chris Dorrell; [email protected]
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