9:14 am, June 7, 2024
New and used car dealer Caffyns today blamed falling used car prices as one of the reasons for making a loss of more than £1.5m last year versus a profit of over £3m the year before.
The publicly listed Car Dealer Top 100 firm reported a pre-tax deficit of £1.545m in its accounts for the year ended March 31, 2024, which were released to the London Stock Exchange at 7am.
That was on revenue that went up from £251.426m the previous financial year to £262.084m.
Its 2022/23 financial year saw it make a profit of £3.090m before tax. Underlying Ebitda, meanwhile, went down from £6.955m to £4.212m.
Impairments on property contributed to the loss, though, and after taking those into account, its underlying loss came to £566,000.
As a result, it is proposing a final dividend of 5p per ordinary share, when last year that figure stood at 15p.
Its share price dropped by 19.4% to 403p per share first thing this morning after the stock market heard the news.
Caffyns, which represents Volkswagen, Audi, Seat, Skoda, Vauxhall, Cupra, Volvo, MG and Lotus at sites across Sussex and Kent, said that of its £10.658m increased revenue, £9.4m came from the sale of new and used cars, with new car deliveries going up by 5% and used cars by 2%.
Service revenue rose by 4%, while its parts business saw sales go up by 6% from the previous year.
Chief executive Simon Caffyn said: ‘Turnover in the year increased by 4% to £262 million as trading for new cars and aftersales remained robust.
‘However, the used car market suffered a significant price correction in the final calendar quarter of 2023 which, along with interest rates and energy costs at elevated levels and inflationary pressures on the cost base, had a detrimental impact on our second-half performance.’
Its performance was also badly affected by volumes dropping at its Motorstore non-franchised businesses in Lewes and Ashford, with the used car business struggling to lay its hands on high-quality second-hand cars.
The Audi businesses suffered ‘much reduced’ profits, although they were deemed to have ‘produced a satisfactory financial performance in the year’.
Its Volkswagen businesses also underperformed, with one of the four dealerships having to take some of the blame due to ‘operational issues’.
Meanwhile, Volvo’s transition to the agency model was said to have ‘presented a number of challenges to both the manufacturer and the dealer network’.
On the bright side, its combined Seat/Skoda businesses were said to have carried on performing ‘satisfactorily’ even though there was a lack of new car products, and Caffyns said it’ll be boosted during the coming year thanks to adding the Cupra brand to Tunbridge Wells dealership.
Meanwhile, its MG business in Ashford – now in its third year of operation – enjoyed ‘significant growth’ during the year, which reflected the brand’s rising market share.
In the accompanying operational and business review, Caffyn praised staff, saying: ‘I am very grateful for the dedication of our employees and their efforts throughout the year to provide our customers with a first-class experience.
‘The company benefits from a dedicated workforce, with more than a quarter of employees having more than 10 years’ service.
‘As a result of their hard work and professionalism, the business remains in a strong position in the competitive retail environment in which we operate, and we continue to be an employer of choice in Kent and Sussex.’
Looking ahead, Caffyn said in the report that the company had a strong order book for new cars.
However, ‘trading conditions in the early part of the current financial year have remained challenging, with inflationary pressures and high interest rates continuing to impact on our cost base, and on our customers’ confidence levels’.
He added that as some manufacturers continued moving to new agency arrangements for dealer networks, that could see some short-term market disruption.
Meanwhile, inquiries about electric cars were still ‘subdued’, although Caffyn said its manufacturers were ‘well placed for the future with a pipeline of market-leading electric new car products due to come to market over the next few years’.
Main image shows Caffyns’ VW dealership in Worthing. Copyright © Caffyns plc
