Turners lifts 1H revenue, profit, expects FY profit gains in strong used-car market

Tuesday 28th November 2017

Turners Automotive Group, New Zealand's largest second-hand vehicle retailer, says first-half revenue and profit rose and it expects full-year pre-tax earnings to rise as much as 26 percent.

Revenue rose 44 percent to $163.8 million in the six months ended Sept. 30, while net profit increased 18 percent to $10 million.

The company is forecasting full-year pre-tax earnings of between $29 million and $31 million, compared with $24.6 million in the 2017 financial year. In the second half, it plans to focus on expanding its retail presence in cars and trucks & machinery, developing a bundled approach to finance and insurance, and building on existing capability to offer servicing and maintenance, it said.

"Turners has reported another positive half year of growth and, while some softening in the used vehicle market was seen during the election period, overall market trends are positive and growth prospects remain strong," chief executive Todd Hunter said. "While the market is incredibly fragmented and competition is active, we believe we have unique attributes and competitive advantages which position us well for continuing growth into the future. An uplift is expected in the second half in line with annual trends and due to the positive impact of the growing finance book and as scale benefits are realised."

Earnings from the automotive retail division rose 33 percent to $115.7 million, with Turners saying organic growth has been underpinned by strong used-car sales and loan origination across the market. Finance revenue gained 39 percent to $17.8 million, while earnings from insurance more than quadrupled to $22.4 million from $5 million a year earlier.

The insurance division benefited from its acquisition of the Autosure business during the year after its existing policies were transferred to Turners on March 31. Those products now represent about 70 percent of Turners' insurance business.

The company declared a 3 cent dividend, payable on Dec. 22.

Turners raised $30 million in September, attracting criticism from the New Zealand Shareholders' Association which said it unfairly diluted smaller shareholders. In its first-half results today, the board said it had reflected on the raising and "acknowledges shareholder feedback received on the merits of a significantly higher rights issue component in future capital raising initiatives."

The shares fell 0.6 percent to $3.14 and have dropped 9.7 percent this year.

(BusinessDesk)

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