Turners Automotive Group has lifted its half-year net profit after tax by four per cent to $19.3 million.
The company points to signs of economic recovery in the automotive retail market.
Revenue for the six months to September 30 was $209m, down two per cent compared with the same period last year. This was attributable to a six per cent decline in automotive retail.
The NZX- and ASX-listed company reaffirmed guidance that the business is on track for another record result this financial year. It is excepted to exceed its $50m net profit before tax target. Earnings per share were up two per cent year on year to 21.8 cents per share.
The company alluded to “extremely challenging macro market conditions”. A downturn in consumer sentiment has put pressure on vehicle prices.
This lowered margins during the period but the market saw “resilient used car volumes, despite new car demand plummeting”.
Chief executive, Todd Hunter, describes the period as one of the “deepest downturns in New Zealand retail”. It meant the company had to reduce used car prices between March and August just to meet the market.
Turners’ finance and insurance businesses helped offset the pressure on auto retail, he said.
“This demonstrates that our strategy to build a business that can grow and deliver value through the cycle is paying off.
“This result reflects not only the effectiveness of our diversified model, but also the quality and skill of our team which responded in an agile fashion to market conditions. It ensured that, while margins were squeezed in auto retail, volumes were slightly up and we continued to grow market share and deliver value for our customers”.
With signs that auto retail is through the pricing contraction, the second half of the year is looking more positive.
“The pipeline of branch expansion opportunities is growing, and the development phase of new branches is going well.
“A strong auto retail business is proving to have a great halo effect for finance and insurance. The interest cycle is moving into a phase that will provide a tail wind for finance.
“Our acquisition of My Auto Shop, as well as distribution agreements in insurance, is proving there is opportunity for considerable further leverage across the network,” the company says.
