5:34 pm, August 30, 2024
Hedin Mobility Group – the Swedish mega car dealership company that pulled out of a takeover battle for Pendragon – has reported a massive loss for the first six months of this year after turning a big profit in 2023.
In its half-year report published this afternoon, the company that boasts more than 12,500 employees and operations in 14 countries said it made a pre-tax loss of 864m krona (circa £64.03m) between January 1 and June 30, 2024.
That was versus a 587m krona (£43.5m) profit during the same period last year.
Ebitda went down from 2.673bn krona (£198.092m) to 2.257bn krona (£167.262m).
The poor result was on net sales that went up from 37.453bn krona (£2.78bn) to 46.803bn krona (£3.47bn).
Its combined margin for retail and distribution, meanwhile, slipped from 2.1% to 0.5%.
In May, the former Pendragon suitor reported a loss of 231m krona (£17.13m) on sales of 23bn (£1.71bn) for the first quarter of 2024.
The Hedin group bought UK dealership chain the Stephen James Group last summer in a deal that saw it take control of five BMW sites and three Mini showrooms within the Greater London area.
That was followed by its acquisition of Luton-based alloy wheel refurbishment specialist RRT last December.
According to the 2024 half-year report, Hedin’s UK retail operational earnings came to 36m krona (£2.67m). Retail margin in the UK was 1.1%.
The company said its UK profitability was ‘lower than desired’, with efforts being made to improve it.
They include creating a unified organisation for the whole operation of the two acquisitions made last year.
It added: ‘The overall market in the UK is at a historically low level. However, our brands BMW and Mercedes-Benz are increasing their market shares, and we have a positive outlook for future development.’
In a statement accompanying the latest results, chief executive Anders Hedin blamed falling demand for electric vehicles as well as ‘significant price adjustments on electric cars’.
The group has embarked on a company-wide cost-cutting programme to fight its way back.
Hedin said: ‘The market has continued to be characterised by caution during the second quarter.
‘We see weaker demand in most of our markets, particularly in electric vehicles, where the European market is complex, and significant price adjustments on electric cars have impacted our result with substantial write-downs and losses.
‘The effect is that we see a decline in revenue within both retail and distribution, especially in new car sales.’
He added: ‘To address the lower sales and adapt to the current market conditions, a cost-saving programme is under way, affecting all parts of our business.
‘The programme is starting to yield results in the second half of 2024. We expect to save around 1bn krona (£74.188m) per year when completed, which is anticipated to happen in 2025.
‘The efficiency improvements are also a way to implement the economies of scales and synergies that the high acquisition rate in previous years has brought.
‘It is our assessment that the market reached a stabilisation point during the second quarter, and we believe in better margins going forward, in combination with a decreasing cost base.
‘We see a continued positive development in sales compared with the previous year.
‘By the end of August, the Swedish Riksbank decided to lower the key interest rate.
‘With expectations of further interest rate cuts combined with lower inflation forecasts, we are optimistic about a gradual improvement in the economy and demand during the second half of the year.’
In February this year, Hedin Mobility Group said that it had sold the last of its shareholdings in Pendragon, having pulled out of the fight to buy the dealer outfit.
Hedin was a 26% shareholder in Pendragon and originally launched an ultimately abortive solo bid to buy it in 2022 after previously blocking eventual winner Lithia’s bid to buy the firm.
It then formed an alliance with Penske Automotive Group and offered 28p per share, which was rejected last September. The offer was then upped but the duo subsequently announced in October that they were pulling out of the race.
