The major piece of good news coming out of results from Pendragon (PDG) was that the car dealership has slashed net debt by 33 per cent - one year early - thanks to a VAT refund, improved cash flow and bumper trading.
Strip out one-off items, and underlying pre-tax profit rose 24 per cent to £23.6m, while profit margins were maintained. Growth was fuelled by strong trading across the business, as Pendragon's sales growth of both used and new cars was usefully better than the market. The new vehicle side saw a 10 per cent uplift in gross profit to £73m, while the used car business experienced a 3 per cent uptick to £70m. Chief executive Trevor Finn says there is a direct correlation between the rise in website traffic and used car sales, which has helped Pendragon boost volumes by 50,000 over four years.
Aftersales profits dipped slightly, but its gross margin improved by almost three points to 62.8 per cent, helping like-for-like profit to rise for the first time since 2008. After years of being static, management believes growth is imminent, thanks to the rising number of new cars on the roads.
Broker Arden Partners expects pre-tax profit of £38.3m for the full year, giving EPS of 2.1p (from £36.4m and 2p in 2012)
| PENDRAGON (PDG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 30.3p | MARKET VALUE: | £436m | |
| TOUCH: | 30-30.3p | 12-MONTH HIGH: | 30.5p | LOW: 13.5p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 19p* | NET DEBT: | 48% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.91 | 21.8 | 1.10 | nil |
| 2013 | 2.02 | 16.7 | 0.80 | 0.10 |
| % change | +6 | -23 | -27 | – |
Ex-div: 25 Sep Payment: 28 Oct *Includes intangible assets of £370.2m, or 26p a share | ||||
