Pendragon PLC Interim Management Statement (5560M)
May 08 2015 - 2:00AM
UK Regulatory
TIDMPDG
RNS Number : 5560M
Pendragon PLC
08 May 2015
INTERIM MANAGEMENT STATEMENT - PENDRAGON PLC (ISSUED 08-MAY-2015)
This Interim Management Statement for Pendragon PLC, the largest
and leading automotive retailer in the UK, covers the period from
01 January 2015 to 31 March 2015. Unless otherwise stated, figures
quoted in this statement are for the three months ended 31 March
2015.
Trevor Finn, Chief Executive:
"We had an excellent first quarter, with underlying profit
before tax increasing by 10.4 per cent. Our winning strategy of
offering choice, value, service and convenience is attractive to
customers and differentiates us from our competitors. In February
we launched the UK's first "click and collect" service, which has
been a success with customers and alongside our other initiatives,
has helped used vehicle revenue to increase by over 8 per cent
which has outperformed the market. We remain encouraged by our
aftersales and new vehicle department results as markets remain
favourable. The performance of the Group is in line with
expectations for the full year."
Highlights
-- Overall in the quarter, underlying profit before tax increased by 10.4% with operating profit increasing by 8.5%.
-- Aftersales gross profit grew by 3.6% on a like for like basis. Aftersales performance is a result of strong
market dynamics and ongoing improvements in our aftersales service.
-- Our continuing used car initiatives helped used gross profit grow by 2.9% as we grew revenue by 8.4% on a like
for like basis.
-- New gross profit increased 9.9% on a like for like basis, as a result of strong margin and volume improvement in
the period.
-- Online visits to Stratstone.com, Evanshalshaw.com and Quicks.co.uk increased by 25.6% in the period. We have
doubled our market share in just five years to become the largest player in the retail dealer website market at
the end of March 2015.
-- Early activity following the launch of the UK's first automotive 'click and collect' service, 'Move Me Closer' is
encouraging.
-- Our financial position is strong, with our debt ratio remaining below our target range.
Strategic Update
Our strategy is focussed on: Choice, Value, Convenience and
Service.
We are making significant progress to support Choice and Service
via our website investment and strategy. At the end of March 2015
for our combined websites we were ranked the number one automotive
retailer by "Hitwise" (Experian's Automotive dealer ranking). Our
combined Automotive Dealership websites share of visits is over 9%
at the end of March 2015 which has doubled in just five years. We
are pleased to report that visitors to Stratstone.com,
Evanshalshaw.com and Quicks.co.uk increased by 25.6% in the
period.
"Sell Your Car" has been operational since quarter three 2014
and is a Value initiative, whereby we guarantee that a consumer who
sells their car direct to Evanshalshaw.com will be paid more than
by 'webuyanycar.com'. We are encouraged by the early progress with
this initiative. Our national TV campaign for both "Move Me Closer"
and "Sell Your Car" has generated over 4.4 million YouTube views in
the period, helping us further build our evanshalshaw.com
brand.
Our Convenience plan is progressing as we seek to complete our
UK footprint and provide our customers a truly national presence
for our vehicle and service operations. We have recently opened new
facilities for our used dealer points in Leicester and West
Bromwich and will shortly be opening a site in north Leeds. We
expect to report further progress during the remainder of the
year.
Trading Update
We operate our core business in the used, aftersales and new
vehicle sectors under the Stratstone.com, Evanshalshaw.com and
Quicks.co.uk brands. We also have a number of support businesses in
the associated markets of dealer IT systems, vehicle leasing and
parts.
Aftersales is our largest profit contributor and gross profit
grew by 3.6% in the period on a like for like basis. In part, we
benefitted from the UK national vehicle parc increasing as a result
of strong growth in the less than three year old vehicle parc.
Additionally, we have achieved growth through enhancing the
customer proposition through technology, such as enabling the
customer to view on their electronic device, vehicle service and
repair issues on video direct from the workshop and to authorise
work from the link provided.
Used revenue grew strongly in the period and resulted in gross
profit growth of 2.9% in the period, on a like for like basis. This
was a result of a number of initiatives including: our click and
collect proposition (www.evanshalshaw.com/move-me-closer) providing
convenience with over 200 retail points and our product choice with
over 20,000 used vehicles to view.
New gross profit, our third largest contributor to
profitability, grew by 9.9% in the period on a like for like basis
and comes from double digit revenue growth in Evans Halshaw and
Stratstone. We believe the new car market will be stable in the
coming year.
The business continues to benefit from strong operational
leverage, with gross profit increasing by 3.8% and operating profit
increasing by 8.4%.
Our financial position remains strong, with our debt :
underlying EBITDA ratio remaining below our target range of 1.0 to
1.5 for the Group. We expect to remain around the lower end of this
range, after reflecting our recent announcement of the proposed
acquisition of a Lexus dealership in California, which is expected
to complete in June 2015. Furthermore, in the UK we continue to
invest in the roll-out of additional footprint to provide us a
truly national presence for our used vehicle operations.
Industry Insight
When publishing our prior year interim and year end results we
indicated that new car registrations would now run in 2015 at a
more "natural" level of 2.5 to 2.6 million units per annum. We
still expect this to be the case. Year to date registrations to 31
March 2015 increased by 6.8% year on year, with retail
registrations increasing by 1.1%. This reflects anticipated market
stabilisation, where retail registrations have grown by 11.9% in H1
2014, 7.5% in H2 2014 and now 1.1% in Q1 2015. We expect the
overall trend towards a greater proportion of new vehicle sales
being through the retail channel, to continue in the medium
term.
The used car market increased by around 2.1% in the year to 31
December 2014 (Experian data). We are still expecting the used car
market to grow by between 1.0% and 2.0% in 2015.
The aftersales market continues to be favourable for the nearly
new vehicle car parc as a result of the new car market increases in
the last three years. These favourable conditions will flow into
the four to six year old car parc in the coming years. We continue
to expect the less than three year old car parc to grow by 7.0% and
the four to six year old parc to grow by 2.0% in 2015.
Outlook
As the largest and leading automotive retailer in the UK, we
have a clear strategy and continue to deliver against it. Given the
strong start to the year, we are comfortable that our performance
will be in line with expectations for 2015.
Enquiries
================ =================== ============ ==============
Pendragon
Trevor Finn Chief Executive PLC 01623 725114
Pendragon
Tim Holden Finance Director PLC 01623 725114
Gordon Simpson Partner Finsbury 0207 2513801
Philip Walters Principal Finsbury 0207 2513801
================ =================== ============ ==============
This information is provided by RNS
The company news service from the London Stock Exchange
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