Car retailers Inchcape, Lookers and Pendragon have released
their respective results for 2007, which show how the three chains
coped with the challenging and competitive market for car sales in
the UK – and abroad.
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Pendragon: Revenues flat, profit falls
Pendragon released the least upbeat market statement of the
three. Its revenues had stayed flat year on year – but its profits
were cut in half.
The UK’s largest quoted car retailer made a profit in 2007 of
£34.8m, before tax and exceptionals, a year-on-year fall of 50 per
cent (2006: £69.4m). Revenues were unchanged on 2006, at £5.1bn.
Chief executive Trevor Finn blamed the fall on a highly competitive
motor retail market, especially in the area of nearly-new used car
sales, and rising interest rates.
“As interest rates rose last year the car market became
progressively more competitive putting pressure on used car
margins. We acted early, closing poorly performing sites and, as a
result, are better placed to face the challenges in what remains an
uncertain market in 2008,” Finn commented.
Used car sales had been damaged by lower transaction prices
on new cars, caused at least in part by oversupply of new models as
manufacturers chased volume. Residual values were particularly
affected, Pendragon said, meaning margins had suffered for sellers
of nearly-new cars.
In 2008, to offset this dampening effect on nearly-new
cars’ residual values, Pendragon said it will focus on selling
older cars.
Sale of surplus property added £18.5m to Pendragon’s
coffers, which when combined with goodwill impairments on closed
businesses amounted to a net exceptional profit of £11.7m, it was
reported.
Lookers: Profit up 12 per cent as sales outpace
market
Lookers, meanwhile, reported a 12 per cent increase in 2007 net
profit, in line with market expectations and said 2008 would be
another year of progress in spite of a challenging market for new
and used cars.
Net profit totalled £16.4m as turnover rose 17 per cent to
£1.68bn. Lookers’ like-for-like new car sales growth of 9 per
cent outpaced the industry average of 2.5 per cent.
A competitive trading environment in the second half of
the year, however, put pressure on its retail margins for both new
and used cars, Lookers said.
All divisions within the group posted satisfactory results
except for its used car retailing business which made an operating
loss of £4.2m.
Lookers said it conducted a full review of the business which
saw the closure of a site in Essex, the rationalisation of two
others in the South West and Midlands and a cut back on vehicle
inventory. These measures are expected to result in a return to
profit for the division this year.
The acquisition of Dutton Forshaw dealership which weighed
on the group’s performance is expected to contribute positively to
earnings in 2008.
“In summary, the market for new and used cars remains
challenging. Our franchised businesses are, nonetheless, performing
to expectations, our used car supermarkets are showing significant
year on year improvement and our independent parts business is
ahead of our planned performance,” chief executive Ken Surgenor
said in a statement.
Lookers also increased its total dividend payout for the
year to 4.02p per share against 3.50p in 2006.
Inchcape: UK and international profits rise
sharply
Record profits at Inchcape have vindicated the retailer’s
decision to focus on selling premium brands and on expanding its
presence in emerging markets.
UK trading profit before exceptionals was £69.6m for the
year, up 52 per cent compared with 2006, a strong result in what
Inchcape chairman Peter Johnson called a “very challenging market”.
Total sales grew by 64 per cent in the UK compared with the
previous year, boosted by the acquisition of European Motor
Holdings in February 2007.
UK sales were up 58.5 per cent to £2.71bn (2006: £1.71bn). On a
like-for-like basis, UK retail sales grew by 5.2 per cent, with
Inchcape’s sales of premium brands growing by 5.5 per cent,
outperforming the overall new car market which grew by 2.5 per cent
as a whole.
However, the like-for-like margin fell from 2.8 per cent in 2006
to 2.5 per cent, “due to pressure on used car volumes and margins”,
Inchcape said.
The group’s combined operating profit from all its
national subsidiaries rose to £269.9m in 2007, up from £213.9m the
previous year. Global sales from all national operations rose to
£6.1bn from £4.8bn in 2006, a rise of 25 per cent.
Inchcape managed strong profit growth in emerging markets with
operating profit in these countries nearly trebling in a year from
£10.6m in 2006 to £29.6m in 2007.
Motor Finance Issue: 41 – March 08
Published for the web: March 27 08 16:4
Last Updated: March 27 08 16:30
