Pendragon attributed in part the “high level of protection” against “Lockdown 3” its new digital approach to auto trading provides for an underlying profit of £ 10.8 million in the first quarter.
AM100 PLC saw a year-over-year increase in underlying earnings of 569.6% for the three-month period ended March 31 – compared to a loss of £ 2.3 million last year – as reported this morning (April 21) published trade update revealed.
The £ 13.1m increase compares with the £ 3.4m profit improvement announced by the Group in its 2020 annual accounts for January and March.
Pendragon’s like-for-like operating profit of £ 19.5 million increased 68.5% over the period.
CEO Bill Berman said, “We performed strongly in the first quarter and demonstrated the benefits of our omni-channel offering.
“Building on advances in 2020, our online capabilities will continue to gain momentum as we advance our strategy. This has contributed to stable sales performance over the period.”
Pendragon reported that it shipped over 40,000 cars in the first quarter (2020: approximately 45,000), with orders being fulfilled through both home delivery and click-and-collect services.
New vehicle volume declined 8.4% on a like-for-like basis (down 11.2% overall), ahead of the overall market, which declined 12% as the volume of used vehicles declined 14.2% on a comparable basis.
Gross profit per unit (GPU) on new cars increased 22.7% to £ 1,481 (2020: £ 1,207). This “more than compensated” for the lower volumes and led to a comparable increase in new gross profit of 12.4%.
The used car GPU was broadly unchanged at £ 1,095 (2020: £ 1,103), which resulted in a 14.9% decrease in the group’s like-for-like gross profit on a like-for-like basis (down 20.4% overall).
Earlier this month, Pendragon announced that it had named former Vice President of Sales and R&I for AutoNation in the United States, Mark Akbar, as the new General Manager of its soon-to-be-renamed used vehicle division, Car Sore.
In today’s trade update, Pendragon reported that the Pinewood software division had posted an operating profit of 13.7% on £ 3.4 million in the first quarter.
Pendragon Vehicle Management’s leasing business increased 35.1% to £ 3.7 million.
In after-sales like-for-like sales decreased 2%, but efficiency gains helped to increase like-for-like gross profit by 0.3%.
The combined effects of the Group’s cost reduction programs and store closures resulted in a comparable total cost of ownership reduction of 10.7%.
Pendragon’s trading update said the group’s board of directors was now “cautiously optimistic” for the remainder of the fiscal year.
Berman said, “I am particularly proud of the way our people have responded to the changing environment and have shown their commitment to delivering a high quality customer experience despite the challenging environment.
“With the COVID-19 restrictions relaxed and non-essential retail reopening last week, we are excited to welcome customers back to our dealerships and are well positioned for the important trading period we have ahead of us. “
Zeus Capital analyst Mike Allen recently told AM that the auto trade’s impressive response to the COVID-19 pandemic, the reopening of dealerships and the “Cazoo Effect” – a new focus on digital and focused marketing – is approving a rise in share prices contributed to the SPS of the sector.
Zeus Capital’s guidance on Pendragon’s assets following today’s trading update states, “We believe this latest statement shows that the model is improving and able to achieve positive operational gearing in the current environment.
“We can see a path to the group that will deliver a PBT of 85 to 90 million pounds by 2025.”
