TROUBLED motor group Pendragon has had to endure ‘a very tough period’, according to an expert.
Commenting on the business’s results for the six months to June 30, which were announced today along with huge job losses, Mike Jones, chairman of dealer profitability specialist ASE Global, told Car Dealer Magazine: ‘This has clearly been a very tough period for Pendragon. The results have been poor, with the company reporting an underlying loss before tax of £32.2m, £60m down on the prior year.
‘The results were accentuated by losses generated by a large reduction in used car stock across both the Car Store and franchised motor businesses, which took place at the worst time, coinciding with the downturn in the market we saw in Q2.
‘This produced reductions in gross profit at Car Store of 48.5 per cent, with overall used car gross profit down 8.2 per cent. Pendragon also saw drops in new car and aftersales gross profits increasing the poor performance in used.
‘As a result of the strategic review into performance, the company has made the decision to close 22 of its Car Store sites and one preparation centre, reducing this business to 12 sites plus two preparation centres. The business now appears to be concentrating on more used car supermarket-style sites with large outdoor display areas, rather than the repurposing of existing retail dealerships.’
He added: ‘The change in direction and review of results also produced a £102.4m impairment of assets – £78.2m of this was a reduction in goodwill, with £22.8m a write-down of property assets, principally in Car Store.
‘It will be very interesting to see which goodwill the business has chosen to impair. Pendragon is still searching for long-term leadership to preside over the strategic direction, with the company now looking for a long-term non-exec chairman and continuing the search for a CEO and an MD for the Car Store business.
‘All this sees the overall outlook for 2019 at the bottom of the board’s expectations.’
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