First-quarter profits motor ahead at Pendragon

The London-listed firm said underlying pre-tax profits rose 23% in the three months to 31 March, to £23m, with like-for-like operating profits up 32% at £37.3m.

The strong performance, which was ahead of management expectations, helped offset a 51.7% spike in interest costs, caused by the succession of base rate rises over the last year. Like-for-like operating costs were ahead 5.4%.

New vehicle volumes rose 20.1% during the quarter. Pendragon said it had benefited from reduced levels of discounting as well as manufacturers focusing on higher-margin models. In used cars, volumes were ahead 14% on a like-for-like basis.

Pendragon said: “There are encouraging signs of improvement in production and supply of new vehicles, although new vehicle supply is expected to remain tight for the foreseeable future.

“The group remains mindful of the macro-economic headwinds, including the potential for further interest rate rises and continued inflationary cost pressures.

“However, as a result of the strong performance in the first quarter, it expects to comfortably outperform the board’s previous expectations for the 2023 full year.”

Bill Berman, chief executive, added: “It is really encouraging to see all of the group’s divisions in growth, particularly when considering the ongoing challenges in the external operating environment.”

As at 0900 BST, shares in Pendragon were ahead 9% at 18.78p.

Jefferies, which has a ‘buy’ on the stock, said: “Continuing the positive trajectory highlighted in March, Pendragon has reported a strong first quarter. We raise our 2023 full-year pre-tax profits estimate by 6%, and remain positive on Pendragon’s trading trajectory, its robust strategic execution and the obvious success of the car transformation.”