NZ Automotive Investments Limited (NZAI) (NZX: NZA) today reports half year earnings to 30 September 2021 (HY22), achieving NPAT within guidance and declaring an interim dividend.
NZAI was performing well in the first four and a half months in the lead up to the raising of Covid-19 alert levels across the country in mid-August. 2 Cheap Cars’ vehicle sales were averaging 800 cars per month over the period, an increase of 27% on the same Covid-19 affected period last year.
Like other retail businesses, NZAI’s operations and the broader automotive industry were impacted by the lockdowns relating to Covid-19 during the latter part of HY22. NZAI’s subsidiaries, 2 Cheap Cars and NZ Motor Finance could not fully trade for at least 45 days, or 24% of the period. The Company was therefore impacted by reduced car sales and by vehicle processing restrictions due to the closure of the vehicle processing hub in Mount Wellington under alert level 4. Throughout the period, the Company has had to be agile in responding to the disruptions and uncertainty.
HY22 revenue and income1 of $31.2m increased by 1.9% on HY21, despite an estimated $7.5 million of lost opportunity in revenue4 due to the effects of the Covid-19 related restrictions.
EBITDA including finance income decreased from $4.0 million in HY21 to $3.2 million in HY22. The effects of trading and operating restrictions brought about by the raised Covid-19 alert levels, as well as additional corporate costs associated with becoming a listed company, contributed to the $0.8 million reduction.
Net profit after tax (NPAT) decreased $0.5 million from $1.9 million in HY21 to $1.4m in HY22 and is within the guidance provided in September, although at the lower end due to the extended nature of the Covid-19 restrictions through the whole of September, particularly in Auckland.
The Board of Directors is pleased to declare a net interim dividend of 1.6 cents per share for HY22, to be paid on 23 December 2021 (2.2 cps gross). The dividend represents 52% of NPAT in accordance with the Group’s dividend policy. This represents a gross annualised dividend yield of approximately 5.2% based on the share price of $0.86, being the closing price on 26 November 2021. The record date will be 16 December 2021.
CEO David Page says “This lockdown has been challenging, however we have taken the opportunity to invest time enhancing key processes in the business and are confident this will lead to efficiencies and improvement in the future, as the used automotive industry bounces back from Covid-19 impacts.”
Outlook
Demand has remained strong for used vehicles outside of Auckland during the Covid-19 related restrictions and Auckland has shown signs of recovery in recent weeks.
NZAI has a solid platform to continue to execute its strategy. Demand remains strong for used vehicles across 2 Cheap Cars dealerships in November 2021 and the business expects to have an improved second half of the year under the new Government ‘traffic light system’ (Covid-19 Protection Framework) – which should mean that retail remains open for business.
CEO David Page says “NZAI remains focused on executing its long-term strategy to leverage its retail business to build a diversified automotive services group. Forecast demand for finance continues to be strong and we expect this to continue to grow in the coming year.
