Pendragon lifts full-year profit guidance amid strong performance

The London-listed firm said performance had remained “strong” during the third quarter, with shortfalls in new vehicle supply mitigated by strong gross profit per unit in both new and used cars, as well as cost and efficiency savings delivered under its strategy.

It said the level of new vehicle order-take remained “robust” throughout the third quarter, remaining above the same period last year.

“However, the well-documented challenges to new car supply, combined with lower levels of opening inventory, have resulted in a reduction in the level of vehicle deliveries achieved,” the board said in its statement.

“The market for new car registrations, as reported by the Society of Motor Manufacturers and Traders (SMMT), is down by 34.4% year-on-year in the important plate-change month of September, with a number of the volume brands which we represent being more heavily impacted.

“Whilst supply has remained a challenge, new car margins have remained strong as a result of these supply shortages, and have also helped to mitigate the volume shortfall.”

In used cars, the company said it continued to see benefits from the improvements delivered as a result of the strategic changes it had made and its sourcing advantages, as well as “unprecedented tailwinds” in used car margins.

Combined, that resulted in used car gross profit being ahead of expectations during September.

“We remain cautious about potential further disruption from Covid-19 to both our local markets and global supply chains, and, despite our broad range of sourcing channels, the impact from ongoing shortfalls in both new and used vehicle supply for the remainder of this financial year.

“Whilst we also continue to expect a realignment of used vehicle margins over time, we expect these to remain strong for the remainder of this financial year, providing us with some mitigation to lower new vehicle volumes in particular. “

The strong year-to-date performance meant the directors now expected group underlying profit before tax for the 2021 financial year to be approximately £70m.

“The board continues to believe the group's strategy positions it well to respond to the ongoing market uncertainty and to capitalise on any resultant opportunities.”

At 1006 BST, shares in Pendragon were up 6.57% at 18.65p.