10:27 am, December 1, 2023
New and used car dealer group Caffyns has seen its pre-tax profit plummet by a staggering 97% to £44,000.
That was despite revenue for the listed dealership chain, which has sites across Sussex and Kent and is ranked 72nd in the latest Car Dealer Top 100 of the UK’s most profitable dealers, rising by 13%.
Posting its interim results today for the six months to September 30, the company said its profit before tax had fallen year on year from £1.558m to the five-figure sum, although revenue had gone up from £118.992m to £134.252m.
Underlying Ebitda, meanwhile, dropped by 22% from £3.283m to £2.564m.
New car deliveries went up by 23% on a like-for-like basis but used car sales volumes were down by 4%. Aftersales revenues, meanwhile, rose by 5% in spite of problems recruiting vehicle technicians, which hit work levels, said Caffyns.
In its accompanying interim management report, it acknowledged the ‘significant reduction in used car profitability’, saying it had been ‘compounded by scarcity of supply of appropriately priced, one-to-four-year-old cars’.
It added: ‘Customer demand for such cars has remained robust, despite the challenging economic backdrop.’
However, profit performance from new cars and aftersales was deemed ‘satisfactory’, with total gross margins slipping by £200,000, or 1%.
But Caffyns said ‘inflationary pressures on costs remained elevated and, in particular, funding charges and energy costs alone increased by £0.9 million in the period’.
Both those cost levels are expected to fall in due course but Caffyns said that ‘short-term pressures’ would linger.
Chief executive Simon Caffyn commented: ‘Revenue growth enabled us to maintain gross profits despite a challenging economic background and significant pressures on used car profitability.
‘Inflationary pressures on costs remain elevated, particularly for funding charges and energy costs, significantly impacting overall profitability.
‘In time, the levels of both these costs are expected to fall back, although short-term pressures will remain.’
Caffyns has declared an interim dividend of 5p per ordinary share.
Its Volvo franchise moved to the agency model in June, with Caffyns reporting that it was ‘performing in line with expectations’ after the transition stage.
Of its other brands, Cupra and Skoda have also moved their electric models to the agency model, with VW and Audi set to follow suit ‘in the coming months’.
Pictured at top via Google Street View and for illustrative purposes only is Caffyns’ MG and Lotus showrooms in Ashford, Kent
