Car dealership firm Pendragon has posted a pre-tax loss of more than £32m as it cited “very challenging” market conditions that it did not expect would improve for the rest of the year.
Pendragon posted a pre-tax loss of £32.2m, down from a profit of £28.4m the previous year.
The car dealer’s net debt closed in at £104.3m, down 17.3 per cent from the previous year.
Group revenue came in at £2.5bn, up 2.9 per cent on a like for like basis, but down 0.8 per cent overall.
The firm warned that it would not propose an interim dividend this year. In 2018 its interim dividend was 0.8p.
Why it’s interesting
Pendragon said its performance was hit by a combination of issues, including reducing its stock of cars which it has accumulated. In the second quarter it slashed prices and cleared cars through auction, which it said resulted in “significant losses” for the period, “exacerbated by market-driven reduction in used car values”.
Pendragon’s woes reflect wider struggles in the car market, which has been hit by the ongoing political uncertainty around Brexit, which has diluted customer confidence.
Last month, Pendragon, which owns the ubiquitous Evans Halshaw car dealership brand, spoke to several firms about helping shake up its spending earlier this year, but the process was cut short by the shock resignation of former chief executive Mark Herbert in late June. Herbert left his role after just three months after Pendragon swung to a £2.8m loss before tax in its opening quarter of 2019.
The group also announced today that non-executive chairman Chris Chambers will step down from the board on 1 October and will be replaced by non-executive director Bill Berman, who will step up as executive chairman.
“Given the challenges the business is facing, both operationally and in the external trading environment, the board felt it appropriate that a senior industry executive with the relevant sector expertise should lead the company,” it said.
What Pendragon said
Chambers said: “Whilst market conditions have been challenging in the first half of 2019 with headwinds in both the used and new car markets the group has continued to deliver like-for-like revenue growth.
“However, there has been a material decline in the group’s profitability principally as a result of the actions taken to address excess used car stock.
“We made significant progress reducing this exposure in the latter period of the first-half and we remain committed to the strategy of growth in the group’s used car proposition. The business is fully focussed on maximising performance, but we expect the market to continue to be challenging during the second half of 2019.”