9:06 am, October 2, 2024
Dealer group Glyn Hopkin has become the latest retailer to report a slump in profits with bosses pointing the figure at ‘inflationary pressures’ in the company’s 30th anniversary year.
Accounts published by Glyn Hopkin Limited via Companies House show that the firm experienced a 66% decrease in pre-tax profit in the 12 months ending December 31, 2023.
Directors say that ‘rising interest rates, weakening consumer confidence and sluggish economic growth’ all contributed to the decline.
The documents show that overall, Glyn Hopkin made a pre-tax profit of £1.83m, compared to £5.45 in 2022.
That is despite turnover rising by more than 7.5% to reach £560.56m, as opposed to the £520.69 the group brought in last time out.
The result marks the fourth year in a row where turnover has risen for the Car Dealer Top 100 outfit, following previous success in 2020, 2021 and 2022.
This year, the vast majority of the firm’s improved revenue (£528.68m) came from the sale of goods, mainly new and used cars.
Meanwhile, the ‘rendering of services’ brought in £25.14m and ‘commissions’ £6.73m.
Elsewhere, staff numbers rose from an average of 820 to 835 with wages and salaries totalling £32.55m.
Despite the plummeting, directors were actually paid more than in the previous year, with their remunerations coming to £3.2m, compared to £2.9m in 2022.
The group’s highest paid director was also awarded a raise from £734,000 to £1m.
The firm’s holding company – Glyn Hopkin Holdings Ltd – has also published its accounts, showing a pre-tax profit of £4.04m, compared to £7.51m in 2022. Both sets of accounts had the same turnover figure for 2023.
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In a statement included in the accounts, chief financial officer Hady Laba said that directors are ‘satisfied’ with the group’s performance in 2023.
‘2023 proved to be a challenging year operationally due to inflationary pressures on utility costs and in the UK economy in general, rising interest rates, weakening consumer confidence and sluggish economic growth which turned negative in Q4 2023,’ he said.
‘Despite the reduction in profits, the directors are satisfied with the results in that 2022 was an abnormal year not just for the company, but for the motor trade in general due to unusually high consumer demand continuing to outstrip the supply of vehicles in the aftermath of the pandemic.
‘This led to significant but temporary increases in both new and used vehicle margins in both 2021 and 2022.
‘In addition, the sector received significant benefits from government schemes and assistance in 2021 some of which, such as business rates support, followed through into 2022.
‘The fall in used car prices from an unsustainable high was particularly noticeable in Q4 2023.
‘Inflationary pressure, particularly with respect to utility costs, had a negative impact across the motor trade sector in 2023.
‘Despite the suppressed volumes in the new car market, in the period 2020 – 23 the company has consistently managed to increase turnover from £368m in 2020, £452m in 2021 £521m in 2022 and £558m in 2023.’
Year of change as group ‘re-evaluates’ relationship with Stellantis
The period covered by the accounts coincided with a period of change for Glyn Hopkin’s dealer network, particularly in relation to its manufacturer partners.
The firm took the chance to ‘re-evaluate its relationship with Stellantis’, which resulted in it no longer representing Fiat, Alfa Romeo or Jeep.
The group continues to partner Renault, Dacia and Alpine, and it enjoyed particular success in 2023 with its MG, Kia and Suzuki franchises.
Laba said: ‘With regards to the various brands operated by the company, Nissan, Kia and MG al performed strongly during the year.
‘Nissan performance has now been on an upward trajectory for the last five years. Kia continues to be one of the most sought after franchises in the UK due to their excellent product range and profit opportunity.
‘MG, part of the giant SAIC Motor Corporation, one of the world’s largest car manufacturers, continues to increase market share rapidly in the UK. The Company now holds 10 MG dealerships.
‘During 2023 new MG dealerships were opened at Mil Hil, Romford, Waltham Abbey and Buckhurst Hil. In Q 1 2024 a further MG dealership was opened at Watford. The company is now one of the three largest MG dealer groups in the UK.
‘With regards to Nissan, the Company consolidated its acquisition of the large Mil Hill dealership purchased in September 2022.
‘A third Kia dealership was added at Colchester in 2023. In the short and medium term a major focus will remain at looking at further opportunities with these three core brands.
‘In addition to Nissan, Kia and MG are also now contributing significantly ot the Group’s overall profitability.’
He added: ‘The Company took the opportunity to re-evaluate its relationship with Stellantis in 2023. All their dealer agreements across Europe came up for renewal in July, and after careful consideration it was decided not to continue with the Fiat, Alfa Romeo and Jeep brands.
‘Profitability from these businesses had been declining in recent years and in a number of cases were loss-making.
‘The removal of these dealerships will cause short term disruption whilst we determine alternative uses for a number of the sites none of which were solus dealerships.
‘The Company has also achieved acceptable results from the Renault and Dacia franchises in 2023. A new Suzuki dealership was opened in St Albans during 2023 relocating from Watford.’
