Auto Trader’s profit before tax dropped 37 per cent to £157.4m last year as a result of giving away free advertising to car dealers during lockdowns.
Revenue fell by nearly a third (29 per cent) to £262.8m, down from £368.9m the year before, as the online advertising giant gave away ads in April, May, December and February and gave dealers a discount in June.
The full year results were revealed to the Stock Market this morning and cover the financial year up to the end of March 31, 2021.
Profit before tax in the 2019/2020 period was £251.5m.
The fall in financial performance comes at the same time as a boom in searches for cars online.
Cross platform visits – which include the website and apps – were up 15 per cent to an average of 58.3m per month.
Auto Trader revealed it now deals with 13,336 car dealers across the UK with the average car dealer spending £1,324 a month with the group.
Nathan Coe, chief executive officer of Auto Trader Group, said: ‘We decided early on to proactively support our people, car buyers and our customers, many of whom run small family-owned businesses.
‘These actions have positioned us for a strong start to this next financial year.
‘There has been a dramatic shift towards buying online which means we now have more buyers than ever turning to Auto Trader to help with their next car purchase, making us even more relevant to retailers and manufacturers.
‘This positions us ideally to enable the buying and selling of cars online, which will materially improve the car buying experience and the business of our customers.
‘I want to thank everyone who has trusted and relied on us, particularly my Auto Trader colleagues who have shown unwavering commitment under the toughest of circumstances.
‘Together our collective efforts have built the strongest of foundations to support the industry in transitioning to true multi-channel retailing underpinned by technology.’
The average number of cars on the site in the reporting period was up one per cent to 485,000 cars – 47,000 of them were new cars.
During the year, Auto Trader acquired finance platform AutoConvert which it says will mean it is ‘well placed’ to bring more of the car buying process online.
The group said it also placed 46m shares in April last year – at the height of the lockdown – which raised £182.9m to strengthen the group’s balance sheet at a time of great uncertainty.
Auto Trader said it furloughed 25 per cent of its employees for seven weeks but ‘reversed it’ as soon as the business had confidence it could return to profitability.
Senior directors took a 50 per cent pay cut during the first quarter of the year and gave up their bonuses in relation to the previous year.
The firm added: ‘We returned all funds received under the furlough scheme and have made all tax payments deferred at the end of the previous financial year.
‘The board has decided to reinstate its capital allocation policy and proposes a final dividend of 5.0 pence per share, which is also the total dividend for the full year.
‘Our capital policy remains broadly unchanged: To continue to invest in the business enabling it to grow while paying around one third of net income to shareholders in the form of dividends.
‘We aim to return the remaining surplus cash to shareholders through share buy backs, which will recommence shortly.’
Auto Trader did not pay a dividend in 2020.
Looking ahead, Auto Trader says it has started the new financial year in a ‘strong position’ thanks to ‘better relationships’ with its customers and says it has a ‘strong pipeline’ of new products.
The firm said: ‘In the longer term, we will be beneficiaries of the major changes underway in the car retailing market, where more of the buying journey is moving online.
‘Despite unusually strong demand and tight supply, Covid-19 is currently having little impact on the financial performance of the business as we start Financial Year 2022.
‘However, as seen in other countries, we cannot yet be sure that Covid-19 will not reappear as a significant negative factor in our future performance.’