2:32 pm, August 20, 2024
Gates Ford turned in what its directors called a ‘mixed’ financial performance last year with pre-tax profit dropping by nearly half on an increased turnover.
The Car Dealer Top 100 business’s newly published results for the 12 months to December 31, 2023 show that it made £3.3m profit before tax versus £6.5m the year before – a drop of 49.2%.
That was on turnover that rose by 7% from £197.2m to £211.3m.
Gross profit margin, meanwhile, dropped from 15% to 13%, with market changes being blamed for the decline.
Ordinary dividends amounting to £2,230,201 were paid. However, the directors didn’t recommend paying a final dividend.
The average monthly number of employees went down from 314 to 302.
Directors’ remuneration, meanwhile, was slightly lower, falling from £1.887m to £1.858m, although the highest-paid director enjoyed a rise, with their remuneration going up from £370,294 to £381,128.
The accompanying strategic report, signed on behalf of the board by director Heath Greenall, said Gates was pleased with the company’s ‘strong financial performance’ in the face of ‘the sustained challenges of a recovering UK economic environment and an evolving automotive industry’.
However, the directors acknowledged that the ‘overall financial performance for the year was mixed’.
They highlighted ‘substantially enlarged costs within overheads, most of which were out of our control and driven by economic factors and government policy (energy, business rates, labour, interest rates and general inflation)’.
The year had started positively, they said, thanks to ‘a steady used car market realising enriched margins, continued customer confidence and demand, and finally improved new vehicle deliveries to fulfil a sizeable order bank carried over from 2022’.
In addition, aftersales performance and profits exceeded expectations.
But the second half of 2023 saw vehicle demand badly affected by rate increases, while a glut of used vehicles meant ‘a considerable market adjustment to used vehicle valuations and a significant downturn in earlier profitability’.
Nevertheless, the board said Gates ‘continues to be financially robust, with significant growth in net asset value’, standing at £11.17m, which was up on 2022’s £10.97m.
And they remained ‘positive, yet cautious, for the year ahead’, despite ‘the ongoing hurdles of global economic uncertainties, inflationary pressures on costs, and elevated interest rates’.
Gates’s financial performance during the first quarter of 2024 was said to have been strong, especially regarding new vehicle sales, and above what was anticipated.
‘We expect used vehicle pricing and inflation to stabilise after much volatility, with interest rate reductions to follow thereafter,’ added the board.
However, the directors pointed out that following Ford abandoning its plans to switch to the agency model, they expected the Blue Oval to bring in modified franchise agreements to the dealer network in the future, after a pilot in Germany, that could affect dealer profitability.
What’s more, although Ford had brought in new electric passenger and commercial vehicles to the UK market and unveiled plans for more battery-electric vehicles, ‘the delay of Explorer, shortage of Transit Custom and discontinuance of Fiesta has not been without its problems.
‘Substandard product quality and vehicle recalls have also been disruptive’.
Gates Ford has been in existence for more than 100 years, starting life in 1920. Since then, it has grown to encompass nine showrooms, FordStores and Transit Centres across Essex and Hertfordshire.
During the year, Gates opened a group vehicle preparation centre near its Stevenage dealership to free up other workshops to focus on more lucrative retail work.
The Enfield dealership was shut and the operation was moved to a new site in Waltham Cross.
Pictured at top via Google Street View is Gates Ford’s site in Woodford
