Pendragon managed to switch its fortunes in the first quarter of 2021 by turning an underlying pre-tax loss of £2.3m for the first three months of 2020 to a £10.8m profit – an increase of £13.1m – it announced today (Apr 21).
An interim management statement to the London Stock Exchange also showed that like-for-like operating profit went up by 68.5 per cent to £19.5m.
Despite the physical closure of showrooms, it still managed to deliver more than 40,000 cars, versus some 45,000 in the first three months of 2020, fulfilling orders via click-and-collect and home delivery.
It said the development of its digital offering had given a high level of protection against the restrictions on retail.
The operating profit in its franchised UK motor sector – it operates via the brands Evans Halshaw and Stratstone – grew by 240.6 per cent to £13.0m.
However, its Car Store division saw an operating loss that remained the same versus the first quarter of 2020, with a £0.7m deficit.
Pendragon’s technology and leasing businesses did well, though.
Operating profit at Pinewood was up 13.7 per cent at £3.4m, which it said was driven by increased user numbers as well as improved gross margins.
Pendragon Vehicle Management saw operating profit rise by 35.1 per cent to £3.7m, mainly thanks to improved residual values on end-of-lease disposals.
Aftersales, which stayed open, saw like-for-like revenue down by two per cent, but Pendragon said that was more than offset by improved gross margin rates benefiting from ongoing efficiency gains, leading to a rise of 0.3 per cent in like-for-like gross profit.
Overall like-for-like gross profit for the group was down by 0.9 per cent (total reported down 6.2 per cent).
Chief executive Bill Berman said: ‘We have delivered a strong performance in the first quarter, demonstrating the benefits of our omni-channel offering.
‘Building on the progress made in 2020, our online capabilities continue to gain momentum as we advance our strategy and this has contributed to a resilient sales performance in the period.
‘I am particularly proud of how our associates have responded to the changing environment, displaying their commitment to deliver a high-quality customer experience despite the difficult environment.
‘With the easing of Covid-19 restrictions and the reopening of non-essential retail last week, we are delighted to be welcoming back customers to our dealerships and we are well positioned for the important trading period we have ahead of us.’
Mike Allen, head of research at investment banking operation Zeus Capital, welcomed today’s announcement, saying it was ‘cautiously optimistic’ for Pendragon.
‘We believe this latest statement shows the model is improving and capable of delivering positive operational gearing in the current environment,’ he said.
It now reckons Pendragon can deliver a pre-tax profit of between £85m and £90m by 2025.
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