8:47 am, April 19, 2023
Bosses at Pendragon say the dealer group is performing well ahead of expectations after a better-than-predicted start to the year.
Figures published today (Apr 19) in an interim management statement reveal that the Car Dealer Top 100 outfit made an underlying profit before tax of £23m in the first three months of the year – a £4.3m increase on the same period in 2022.
The 23 per cent rise was made possible by increasing sales across the board, with new vehicle volumes up 20.1 per cent on the prior year on a like-for-like basis.
Like-for-like used vehicle volumes were up 14 per cent, thanks in a large part to the group’s CarStore brand of car supermarkets and its relaunched website.
New vehicle gross profit per unit (GPU) was up by 9.4 per cent, or £230, to £2,686 compared with last year’s first quarter.
The used GPU figure of £1,457 was, however, 17.7 per cent (£314) down on last year’s £1,771 GPU, which Pendragon said had benefited from ‘uniquely elevated market conditions’.
Overall, the group’s motor division, which includes the brands Stratstone and Evans Halshaw, enjoyed a stellar Q1, with operating profit rising by 38.7 per cent to reach £28.3m.
Elsewhere, the group’s software business, Pinewood, delivered operating profit growth of 14.3 per cent to £3.2m, compared with £2.8m this time last year.
It was also a strong start to the year for the outfit’s leasing business – Pendragon Vehicle Management – which recorded an operating profit of £5.2m, against a £4.9m result in Q1 of 2022.
When it came to outgoings, operating costs increased by 5.4 per cent on a like-for-like basis and by 2.6 per cent in total, but this was largely absorbed by increased revenue.
Reacting to the results, executives said they were ‘pleased’ with the strong start to the year, which they said was ‘ahead of the board’s expectations’.
They added that the strong performance in Q1 meant they expected the company ‘to comfortably outperform the board’s previous expectations for FY23’.
Bill Berman, chief executive, said: ‘I am delighted to report a very strong performance in the first quarter, which builds on the momentum we generated last year from the progress with our strategic and operational initiatives.
‘We continued to trade strongly in UK Motor, across both new and used markets, and our performance shows the benefits of the strategy we have been pursuing in recent years.
‘It is really encouraging to see all of the group’s divisions in growth, particularly when considering the ongoing challenges in the external operating environment.
‘We are seeing improving signs in the production and supply of new cars and we are focused on continuing to deliver for our customers and OEM partners in the months ahead.’
Performance ‘well ahead’ of previous years
Among those to react to the results was motoring finance expert Zeus Capital, which upped its full-year pre-tax profit forecast.
Specialists from the company said Pendragon was in a strong position heading into Q2.
A spokesman said: ‘Pendragon has released a trading update for the quarter to 31 March 2023 showing performance well ahead of Q1 2022.
‘The group has had a strong start to the year, with underlying profit before tax up 23 per cent to £23m (Q1 2022: £18.7m).
‘As expected, interest costs increased, but the group’s performance against its strategy meant that underlying absolute EBIT growth more than offset this.
‘With performance ahead of expectations, we increase FY23 underlying profit before tax by 11.7 per cent to £55m.
‘We remain comfortable with our sum-of-the-parts valuation estimate of 26.8p per share, which represents a 56 per cent upside to last night’s closing price.’
