Pendragon today (Jul 30) raised its underlying pre-tax profit guidance for 2021 and now expects to make between about £55m and £60m.
In a trading update to the London Stock Exchange released at 7am, it said a strong close to June, as well as continuing momentum in the used car market during July outperformed the board’s expectations.
Industry-wide supply problems had led to what it labelled ‘exceptional gross profits per unit’ as well as good levels of demand. The profit prediction is before tax guidance and up from the pre-tax guidance figure of £45m to £50m that it gave in June.
The group said it had maximised its used car performance this month by keeping good levels of used car stock in a market that was under pressure, which showed the benefits of its wide range of vehicle sourcing channels.
Exactly a month ago – on June 30 – Pendragon predicted making an underlying pre-tax profit of around £30m for the first half of this financial year, after losing £31m during the same period in 2020.
As at June 30, 2021, Pendragon – the third most profitable car dealer group according to our inaugural Car Dealer Top 100 list, using EBITDA as a benchmark – said it had a net cash balance of £9.5m versus a net debt of £46m for the first half of 2020, thanks to strong trading as well as a continued focus on cash management.
The group, which owns the Evans Halshaw and Stratstone brands, warned of continuing uncertainty because of possible further disruption from Covid-19.
It also said the timing of an expected realignment of used vehicle margins as well as new and used vehicle supply constraints could cause problems.
But it added: ‘The board continues to believe the group’s strategy positions it well to respond to the ongoing market uncertainty and to capitalise on any resultant opportunities.’
At the start of the year, former Pendragon boss Trevor Finn joined major shareholder the Hedin Group as a non-executive director.
It was subsequently reported that 250 of 400 accountants’ jobs at Pendragon were at risk.