15 September 2021

Pendragon has recorded an underlying profit for the first half of 2021 of £35.1 million, up from a loss of £31.0m in H1 2020 when the pandemic first struck. The figures come on the back of a £1.82 billion turnover figure, up 49% on 2020.

After a non-underlying charge of £4.3m, the pre-tax profit was £28.4m.

Bill Berman, Pendragon chief executive, increased his prediction for full-year profits to between £55-60m up £10m on a pre-close statement issued at the end of June.

Commenting on the results, Berman said: “While we acknowledge the positive market tailwinds, much of this progress has been underpinned by our new strategy, which has resulted in significant improvements to the Group’s digital capabilities and cost savings associated with the restructure of our store estate and the improved efficiency of our operating model. The work undertaken to advance our online channels last year meant more than 40,000 vehicles were delivered to customers during the lock- down period alone.

“In line with the wider market, we are anticipating continued shortages in both new and used vehicle supply for the remainder of the year. We’re continuing to deliver on our strategy and see significant prospects for the Group to capitalise on the exciting market opportunities ahead. We remain confident that underlying profit before tax for the full year will be £55m to £60m, ensuring we stay on track to deliver our target of £85m to £90m by FY 2025.”

The majority of the group’s profits came from Pendragon’s franchised retail operations which recorded an underlying profit of £37.6m. The group’s Car Store used car operation reported an underlying profit of just £0.3m on a turnover of £66.0m in H1.

Pendragon has been more optimistic about the second half of 2021 than other retailers. In the group’s pre-close statement in June, it predicted a full-year underlying profit figure in the region of £45-£50m and now £55-£60m.

Other groups have issued statements expecting minimal uplift between their H1 and full-year results.

Despite the positive prediction for 2021, Pendragon did warn of uncertainty over the impact of Covid and vehicle supply in both the new and used car markets.

Group Highlights

• Group Revenue up 49.0% to £1,815.6m (H1 FY20: £1,218.3m).
  Underlying PBT of £35.1m, compared to a loss of £31.0m in H1 FY20.
• After non-underlying items the Group reported a profit before tax of £28.4m (H1 FY20: Loss of: £41.4m).
• Outperformed the new car market as measured by SMMT with a 42.7% like-for-like increase in new cars sold vs a total market growth of 39.2%, and a market increase of 35.7% in Pendragon represented franchises.
• Encouraging progress against Group Strategy, significant number of initiatives underway. o Adjusted net cash of £9.5m (FY20: adjusted net debt of £100.4m).

Franchised UK Motor

• Strong recovery from the initial impact of the pandemic in H1 FY20. o Underlying operating profit of £37.6m (H1 FY20: Loss of £18.1m)
• Revenue up 56.9% to £1,673.8m (64.6% on a like-for-like basis).
• Gross margin of 10.9%, up from 10.2% in H1 FY20
• Used gross margin of 8.8% (H1 FY20: 7.1%)
• New gross margin of 6.4% (H1 FY20: 5.9%)
• Aftersales gross margin of 49.6% (H1 FY20: 46.4%)
• Strength in used stock sourcing maximising access to higher margins in favourable market conditions.
• Total operating costs up by 13.9%, with FY20 costs lower as a result of the significant government support programmes accessed in H1 FY20.
• Cost reduction programmes and store closures delivering significant benefit, with costs down £45.2m compared to H1 FY19.

Car Store

• Underlying operating profit of £0.3m (H1 FY20: loss of £1.7m).
• Revenue up 53.1% to £66.0m on a total basis (54.2% on a like-for-like basis). o Gross margin rate of 8.0% (H1 FY20: 6.7%).
• Development of the Used Car proposition ahead of relaunch.

Tags: Bill Berman, Pendragon