07 August 2018

Profits and operating margins at Pendragon have taken another major hit as the group announced financial results for the half-year to end of June 2018. The group said its underlying profit before tax for the period was £28.4m, down by 41.4%, due to the poor performance of its UK motor division.

During the period the group shed two of its premium franchise points (it has since sold two more) and completed the first disposal of a US franchise; moves that it announced last year as part of a strategic review. Group revenue is marginally up at £2.48bn but operating profit is down 41.4% at £42.7m and the operating margin across the group dropped 0.7% to 1.7%.

The results are in sharp contrast to H1 last year when growth in used car sales more than compensated for a drop in new car performance. Used car gross profit in this year was down by 14.3%, driven “primarily by margin pressure in the nearly new premium car segments”.

Chief executive, Trevor Finn, sought to steady the ship by telling investors that the results were “in line with expectations”. He said: “We are gaining momentum as we lead the transformation to fully online used car retailing. This will give us greater self-determination and deliver more reliable, sustainable earnings.”

The group intends to double its used car revenue by 2021 and has opened Car Stores in Norwich, Shrewsbury and Ipswich. An experienced used car director has been appointed to manage the operation and roll out of Car Stores and the group is centralising refurbishment of used to “industrialise this process”.

The group said it had avoided capital expenditure of £18.2m through the sale of the premium franchises and released a total of £26.0m in capital. Net debt is now down to 0.8% of EBITDA.

Tags: Car Store, Financial results, Half year, Pendragon, Trevor Finn