Automotive retailer Pendragon has published the results of its financial and operational review, warning of significant loss making in the first half of FY19.
The company attributes the forecast to a continued challenging market, citing the latest SMMT figures which reported a decline in new car registrations of 3.1% in 2019 and significant declines in used car valuations. Coupled with that, the company also stated that FY19 is expected to be impacted further by “certain internal operational challenges”.
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As a result, the board predicts profit before tax to record a small loss in FY19, before returning to overall group profitability next year.
The board has placed an emphasis on the developing the strategy of its Car Store business. The company is expected to see 2018’s £11.9m losses accelerate to around £25m during FY19, “principally as a result of execution inefficiency and the impact of excess used car stock during the first half”.
To address the challenges facing the company, a preliminary action place has been put in place by the board. This includes improvements in new vehicle retail market penetration resulting in reduced tactical registrations and improved used car stock management and profiling.
Mark Herbert, chief executive of Pendragon, said: “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.
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By GlobalData“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.”
