Car dealership Pendragon reported a modest full-year profit on Wednesday, despite seeing revenues tumble by more than a third, after a strong end to the year helped offset first-half losses.
Group revenues for the 12 months to 31 December were £2.9bn, down 35.1% or 25.5% on a like-for-like basis. The underlying pre-tax profit for the year was £8.2m, however; first-half losses were £31.0m, but those were offset by pre-tax profits of £39.2m in the second half.
The final pre-tax loss was £24.7m compared to 2019’s £117.4m loss.
Chief executive Bill Berman said 2020 had been “a year unlike any other”.
He said: “Our performance was quite clearly defined by the changing external environment and varying restrictions in place across the two halves of our financial year. In the first half, our focus was on managing disruption from the first national lockdown and adjusting to the changing market dynamics, while the second-half saw adaptions to our ways of working, as well as a recovery.”
Looking to the current year, Pendragon – which owns the Stratstone and Evans Halshaw brands – said trading had been impacted by the current lockdown. However, improvements made to its digital offering over the last year enabled it to deliver more than 20,000 vehicles to customers in January and February.
Group like-for-like new car volumes were down 24.3% year-on-year as at 28 February, against the wider market decline of 38.1%, as reported by the Society of Motor Manufacturers and Traders. Pendragon’s used car volumes were down 32.8%.
Aftersales proved more resilient, however, with gross profit down 13.1%.
Pendragon said the underlying loss before tax was £4.8m, an improvement on the same period a year earlier when it was £8.2m. “Overall, we are pleased with this performance against the challenging conditions of trading in lockdown,” it said.
Berman added: “There is good momentum in the business, despite the external pressures. We are confident the improvements made to our business model over the past year leave us well positioned to navigate this period.”
Sanjay Vidyarthi, analyst at Liberum, said the results were in line with expectations and called current trading a “resilient lockdown performance”. But he added: “Much of course depends on how strongly demand rebounds when dealerships re-open in April. Liberum’s full-year 2021 estimate for pre-tax profits is £20.7m, against consensus for £40m. The company has re-iterated its aim to achieve £85m-£90m pre-tax profits by 2025.”
Liberum has a ‘hold’ rating on the stock and a target price of 12p.
As at 1130 GMT, shares in Pendragon were off 3% at 17.84p.