Arnold Clark profits fall 31.7 per cent

Arnold Clark Automobiles, the UK’s biggest privately owned dealer group, saw pre-tax profits fall by 31.7 per cent for the year-ended 31 December 2010 as sales of new cars rose and used cars fell.

Pre-tax profits fell from £73.9m to £50.5m, a £23.4m shortfall, although turnover was up 6.1 per cent to £2.271bn, compared with £2.139bn in 2009.

New cars sales for the period grew by 3.0 per cent to 77,626 (2009, 75,390) while used volumes were down 2.1 per cent to 116,338 (2009, 118,817). Like for like sales grew by 2.6 per cent.

Net assets for the group, rated number three in the Motor Trader Top 200, were up 8 per cent to £447m (2009, £413m).

Sir Arnold Clark (pictured), chairman and chief executive, described the growth in turnover as “better-than-expected” as the group was hit hard by bad weather at the beginning and end of its financial year.

“This growth is particularly pleasing given that we lost a large portion of two trading months to the unusually heavy snowfalls experienced. The heavy snow and freezing weather in January coincided with our annual Real Sale event and resulted in a poor start to the year. Arctic conditions returned in December leaving many of our branches, particularly those in Northern and Eastern Scotland, under several inches of snow for at least two weeks and effectively unable to trade during that period.”

“The fall in pre tax profits to £50.5m was not unexpected as 2009 was an exceptionally strong trading year due to a number of factors which mitigated the effects of the downturn on the motor industry. 2010 saw VAT return to 17.5 per cent and the scrappage scheme, which had accounted for almost 15 per cent of the new car market, came to an end in March. As anticipated, used car values returned to a more typical pattern during 2010 and, although residual values remained relatively strong, vehicle margins declined from the highs of 2009.”

Sir Arnold said it was difficult to make any predictions for 2011 because of the continued uncertainty regarding the impact of the government’s Spending Review on public sector jobs. However, he added the group is looking to expand its operations.

“Despite these factors, the group remains exceptionally well funded, allowing us to source the best available stock opportunities and ensure that we offer our customers the best possible value in these difficult times. We will also be able to take advantage of any suitable expansion opportunities that may arise in the coming year.”

Arnold Clark: financial highlights year ended 31 December 2010

• Turnover up 6.1% to £2.271bn (2009, £2.139bn)
• Pre tax profits down by £23.4m to £50.5m (2009, £73.9m)
• Net Assets up 8% to £447m (2009, £413m)
• New cars units up 3.0% to 77,626 (2009, 75,390)
• Used cars units down 2.1% to 116,338 (2009, 118,817)