Auto Trader confident for year ahead despite profits dip

Auto Trader Group sounded a positive note for the year ahead on Thursday, despite posting a dip in annual profits.

The car marketplace - the UK’s largest - said group revenues in the year to 31 March rose 16% to £500.2m, boosted in part by the acquisition in June 2022 of Autorama, a vehicle leasing specialist.

Adjusted earnings before interest, tax, depreciation and amortisation were ahead 7% at £328m, while average revenue per retailer per month rose 10% to £2,437.

However, costs associated with the acquisition of Autorama meant group operating profits fell 9% to £277.6m. The group operating profit margin also came under pressure, falling to 55% from 70% a year previously.

Pre-tax profits eased to £293.6m from £301m.

Both revenues and profits were ahead of expectations, however, with most analysts forecasting pre-tax profits closer to £272m.

The blue chip also struck an upbeat note looking forward, noting: "The new financial year has started well and the board is therefore confident of meeting its growth expectations for the year.

"We expect another good year of retailer revenue growth, by far the largest part of our Auto Trader business."

Nathan Coe, chief executive, said: "This year marks another strong financial and operational performance. Given the challenging economic backdrop and historically low levels of vehicle supply, these results are a credit to our people and the close partnerships we’ve developed with our customers.

"The prospects for our marketplace are as strong as they have ever been, underpinned by the significant number of car buyers and retailers using Auto Trader."

Richard Hunter, head of markets at Interactive Investor, said: "Auto Trader’s dominance in its market continues to drive growth, despite the ongoing challenges within the wider car industry.

"In some ways, the constrained new and indeed used car market has played into the group’s hands, with cars selling faster than at any time over recent years. These factors combined to reduce the average number of cars listed by the group by 14%, but not at the expense of its income from retailers, which are something of a lifeblood to the business."

Auto Trader also announced on Thursday that retail veteran Matt Davies would be its next chair. The former chief executive of Tesco, Pets At Home and Halfords, and current chair of Greggs and Hobbycraft, will join as chair designate on 1 July before succeeding current incumbent Ed Williams later this year.

Williams is stepping down at the end of his three-year term.