Pendragon reports strong first half despite supply shortages

Pendragon turned in a strong first half performance with underlying pre-tax profits down -4.6% to £35.1m on turnover up 1.6% to £1.8bn.

The group sold fewer cars but made more money on them. New gross profit per unit surged 59% to £2,576 and used gross profit per unit rose 22.7% to £1,676.  New volumes fell -17.5% and used volumes -13.7% on a like-for-like basis. Aftersales gross margin was 51.3%, up 1.8 percentage points.

Total operating costs  rose by £24.2m, or 16.2%, driven by non-repeat of government support measures, increased used car brand marketing and higher  inflation.

Its software business Pinewood saw operating profit decline 17.9% to £5.5m on revenues up 2.5% to £12.4m due to increased costs.

It said trading through July and August was in line with expectations and it expected new and used vehicle supply shortfalls to continue for at least the remainder of the current financial year. It had a new car order bank of 22,000 at the end of June.

It added that while the economic backdrop was challenging it expected to deliver group underlying profit before tax in line with board expectations for the current financial year.

Bill Berman, chief executive officer, said: “We have made a really encouraging start to the year which is reflected in a strong set of financial results and continued momentum across the business.

“Good progress has again been made in the delivery of our strategy, including the brand relaunch of our used car business and multiple technology releases by Pinewood.

“We have transformed our digital capabilities over the past two years and this, combined with significant improvements to our operations, means we are well placed to offer our customers the best possible experience.

“We have delivered these results in the face of challenging trading conditions in our sector due to supply constraints on both new and used vehicles and the impacts of inflationary pressures. We expect the environment to remain challenging in the second half of the year, however we take confidence from how we have performed in the last six months and expect to make further positive progress towards our long-term goals this year.”