Pendragon skids lower as Q1 profit more than halves, new vehicle revenue slumps

Pendragon shares skidded lower on Wednesday after the auto retailer said first-quarter underlying pre-tax profit more than halved as new vehicle revenue tumbled.

In the three months to the end of March, underlying pre-tax profit dropped to £15m from £32.4m in the same period a year ago, as new vehicle revenue declined 13.3%, with gross profit for the division down 17.6% versus a record first quarter last year. This came as national new vehicle registrations declined 12.4%, with retail registrations down 13.8%

Meanwhile, used vehicle revenue was down 1.5% while gross profit for the division fell 16.5%. Excluding nearly new vehicles, used vehicle revenue grew by 3.1% in the period.

The company also said it was unable to retain sufficient used stock to meet demand, with sales suffering as a result. However, Pendragon is increasing used inventory levels in the second quarter with a view to capturing an increased volume of activity at an improved margin, as this stock will increase its proportion of newly acquired used stock.

Chief executive Trevor Finn said: "Our profitability in the first quarter of the year is in line with our expectations against a backdrop of an exceptionally strong comparative in the prior year and our expectations of the market conditions in the first quarter being realised. In the first quarter of 2017, the industry experienced the effect of the vehicle licence tax changes which brought forward vehicle revenue into quarter one of 2017. We also achieved in quarter one 2017 record used vehicle revenue as the group tested the sales capacity of its retail stores.

"We are making progress on the delivery of our target of doubling used revenue by 2021 with three retail store openings this quarter and further retail stores planned in the year. The group performance remains in line with expectations for the full year."

At 1050 BST, the shares were down 5% to 28.35p.