24 March 2021

Pendragon has recovered from a pre-tax loss of £31 million in the first half of 2020 to finish the year down £16.4m. However, the dealer group reported an underlying profit of before tax of £8.2m. Revenue was down 25.5% at £2.92bn during 2020 compared to £4.51bn in 2019.

Pendragon attributed its performance to its staff and its ability to offer online sales. Despite a third national lockdown, the group said it has delivered more than 20,000 vehicles in the first two months of 2021.

The sales decline has been “more than offset by improved gross margins” and a lower cost base, Pendragon reported.

Bill Berman, CEO, Pendragon

Commenting on the results Bill Berman, CEO, said: “It has been a difficult year for many people and I’d like to thank all of our team who have worked exceptionally hard throughout the COVID-19 pandemic. Their resilience and dedication meant we were able to deliver a solid performance in what has been a particularly challenging period for the car retail industry.

“We took early and decisive action to ensure the safety of our associates and our customers and protect the Group’s financial position.  We also accelerated the development of our digital capabilities and introduced both click and collect and home delivery options for our customers. These actions, coupled with the positive progress made against our new strategy, provide us with a strong platform for the future and the results for this period show there is good momentum in the business, despite the external pressures. We are confident the improvements made to our business model over the past year leave us well positioned to navigate this period and accelerate our strategy during the course of the year and beyond.”

Pendragon revealed its 2019 full-year results five days before the first lockdown last year recording a pre-tax loss of £97.8m, some £7m worse than 2018, on a turnover of £4.51bn. Pendragon’s underlying loss before tax for 2019 was £14.6m compared to £47.8m in 2018.

2019 was a turbulent year for Pendragon with the retirement of longstanding CEO Trevor Finn, followed by the loss of his replacement Mark Herbert only three months into his role, a profit downgrade and the closure of most of its Car Store used car operations. Pendragon also announce its six-month figures a month later than usual and the group revealed it had made a pre-tax loss of £130m at that point.

Group Highlights

o  Underlying losses before tax of £31.0m in H1 offset by underlying profit before tax of £39.2m in H2, resulting in FY underlying profit before tax of £8.2m.

o  Group Revenue is down 35.1% to £2,924.6m (FY19: £4,506.1m).

o  After non-underlying items the Group reported loss before tax of £29.6m (FY19: £114.1m).

o  New strategy launched and strong early progress made, including enhanced digital. capabilities and developments to vehicle acquisition processes.

o  Organisation structure review completed, delivering annual equivalent benefit of c.£35m.

o  Estate review completed and 15 stores closed, delivering an annual equivalent benefit of c.£2m.

o  Digital capabilities accelerated rapidly.  Fully transactional platforms enabled, offering both click and collect and home delivery propositions for customers.

• Franchised UK Motor

o  Underlying operating profit up 42.3% to £18.5m (FY19 : £13.0m).

o  H1 reported underlying operating loss of £18.1m (H1 FY19 : loss of £7.7m) driven by the impact of the COVID-19 pandemic, strong recovery delivered H2 underlying operating profit of £36.6m (H2 FY19 : £20.7m).

o  Revenue and margins recovered against H1 across used, aftersales and new in H2 FY20.

o  Revenue is down 30.5% to £2,591.8m (FY19: £3,730.8m).

o  Reported operating losses after non-underlying items was £10.6m (FY19: operating losses of £96.4m).

o  Used car gross margins rose from 7.1% in H1 to 9.7% in H2, aftersales margins rose from 46.4% in H1 to 51.2% in H2 and new margins rose from 5.9% in H1 to 6.9% in H2.

o  FY Used vehicle gross profit per unit increased by £422 to £1,200 (FY19: £778).

o  LFL cost reduction of 20.9%, underpinned by Government support programmes, and the review of the store estate and organisational structures.

o  Total new car registrations down 29.4% in FY20, Pendragon new units sold down 29.5% on a like-for-like basis (down 32.9% total reported).

Tags: Bill Berman, Pendragon