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Pendragon's losses deepen

The auto retailer expects to lose money over the full year
September 18, 2019

Pendragon (PDG) warned in June that it expected to be “significantly lossmaking” in the first half of the year. The vehicle retailer's half-year results painted an even bleaker picture, revealing that full-year losses are due to land “at the bottom” of management's expectations. The shares fell by a tenth following the announcement.

IC TIP: Sell at 10p

The auto-retail sector is struggling with a panoply of issues, from declining car registrations and tightening emissions standards, to the prospect of a hard Brexit. Still, Pendragon’s troubles have been compounded by the fact its chief executive left in June, after just three months at the helm. He has not yet been replaced, but the group announced that non-executive director Bill Berman would be appointed to the newly created role of executive chairman on 1 October, following the departure of non-executive chairman Chris Chambers.

Efforts to reduce an excess of used car stock were met with some success, lowering stocks for franchised UK motor by £140m to £236m. However, “higher than expected losses” caused the group to swing into an underlying pre-tax loss of £32.2m in the period. The group closed 22 of the physical stores for its online marketplace carstore.com. 

Bloomberg consensus is for adjusted EPS of 0.7p for the full year, from 2.8p last year.

PENDRAGON (PDG)   
ORD PRICE:9.8pMARKET VALUE:£137m
TOUCH:9.8-9.9p12-MONTH HIGH:29pLOW: 9.5p
DIVIDEND YIELD:7.1%PE RATIO:na
NET ASSET VALUE:11p*NET DEBT:68%
Half-year to 30 JunTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
20182.4827.31.50.8
20192.46-135-9.3nil
% change-1---
Ex-div:na   
Payment:na   
*Includes intangible assets of £196m, or 14p a share