7:14 am, September 29, 2020
Pendragon lost £31m in the first half of the year as it battled lockdown restrictions which had a huge impact on trading.
The dealer group saw revenue fall 43.4 per cent to £1.21bn during the period with the group making wide use of the government support offered to businesses, it told the Stock Market this morning.
At one point, 80 per cent of its workforce was furloughed.
The bitter blow of the pandemic came after the group started the year ahead of 2019 with trading up – January and February were £5.1m ahead of the same period last year.
However, as the crisis took hold, Pendragon fell to a loss of £2.3m in the first quarter.
And it was the second quarter that cost the group dearly where it clocked up a £28.7m loss, driven by the closures of dealerships in April and May.
Pendragon returned to profitability in June, though, after dealers were allowed to reopen on June 1.
Bill Berman, chief executive officer said: ‘The Covid-19 pandemic has had a significant impact on our business during the period, however, thanks to the agility, hard work and commitment of our people, we have performed resiliently.
‘We’ve been encouraged by the first few months of trading following reopening and, while the outlook for the remainder of the year remains uncertain, we are confident the operational improvements we have made leave us well-positioned for the long-term.
‘We recently set out our new strategy with digital innovation and operational excellence at its core. Both will be instrumental in transforming Pendragon’s performance and we have made great progress in both areas already this year.
‘While there is some distance still to travel, we remain firmly committed to achieving our twin goals of sustainable profit growth and attractive returns for shareholders.’
The dealer group has bounced back since the reopening, though, with summer trading buoyant. July and August clocked up a profit of £7m, an increase of £19m on last year when the group clocked up a £12m loss.
Cost cutting played a significant role in the improved numbers with like-for-like costs down 18 per cent.
In the first half of the year, the results reveal the group’s franchised dealer business lost £18.1m and its Car Store used vehicle arm lost £1.7m, the latter a reversal of a £19.1m loss for the same period last year.
Its Pinewood software arm added £5.9m profit, down 9.2 per cent, while its leasing business was down by a quarter but still adding £4.7m of profit.
The disposal of the group’s US motor group assets – something that Berman told Car Dealer he would never have agreed to if it had been his decision at the time – generated £78.8m of revenue.
Pendragon added that discussions were ongoing about its last remaining American location in Santa Monica.
Pendragon said it remained cautious about the outlook for the rest of the year and would therefore ‘not be reinstating guidance at this point’.
Mike Jones, ASE Global chairman and compiler of the Car Dealer Top 100 coming out next month, said: ‘The Pendragon results clearly show the impact of the Covid crisis.
‘Underlying results for H1 were very similar to 2019, albeit that result was caused by a very poor performance in the Car Store division, where significant used vehicle write-downs were required.
‘2020’s first half results were driven by the franchised UK motor division which produced a like-for-like underlying operating loss of £15m compared to a loss of £1.3m in the prior year.
‘The business has continued to restructure this division, still struggling to generate significant profits and the profitable turnaround of this area will be vital to delivering the forecast £85m-£90m profit in FY25 which looks a long way from current performance.’
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