Brisbane-based car dealer, A.P. Eagers has belied the market gloom about its share price in recent months with a profit upgrade that revealed a tiny 0.3% rise in pre-tax profit for the six months to June 30. That is better than the downgrade in may suggested.
The company told the ASX yesterday investors can expect a net profit before tax of approximately $68.1 million for the first half of 2017, compared to $67.9 million for the corresponding period of 2016.
"After a weak new vehicle market through until the end of April 2017, the company had issued profit before tax guidance for the half year in the range of 7% to 9% below last year’s record result.
"However, a nationwide surge in new vehicle activity during May and June 2017 (up 6.4% and 4.4% respectively on 2016) combined with companywide operational improvements drove a return to record profitability.
"Buoyant market conditions in May and June led to very strong results from our Victorian and Tasmanian operations, while our New South Wales and South Australian operations have continued to perform well. Our National Truck Division produced consistently strong results throughout the half year and continues to improve profitability.
"Our largest geographical market segment of Queensland and Northern Territory also rebounded in May and June.
"This combined effort across our group has eradicated the forecast profit shortfall and generated our strong half year result,” The company said yesterday.
Eagers has a 22% stake in its bigger rival, Automotive Holdings. That company has so far not provided an update on its performance from its warning in late May of weak sales Western Australia, softer demand in East Coast markets and tougher consumer credit markets in April.
Eagers half year result is due for release late next month, Automotive Holdings full year figures will be out around the same time. The share sin both companies were sold off in may and most of June on fears of a weak result because of lower car sales. But car sales rose in May and hit an all time high in June (according to industry figures).
Eagers shares jumped more than 5% to $8.91 yesterday, while Automotive Holdings shares rose 1.4% to $3.50.
