14/05/2019 - 09:39

AHG downgrades full-year profit

14/05/2019 - 09:39

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Automotive Holdings Group has downgraded its profit guidance for 2019 due to weak car sales and the performance of its refrigerated logistics division, a week after it recommended an improved takeover offer from rival auto retailer AP Eagers.

Its previous guidance, provided in February, was between $52 million to $56 million.

Automotive Holdings Group has downgraded its profit guidance for 2019 due to weak car sales and the performance of its refrigerated logistics division, a week after it recommended an improved takeover offer from rival auto retailer AP Eagers.

In a statement, AHG said challenging conditions facing its franchised automotive retail outlets and weaker than expected trade in its refrigerated logistics division around Easter reduced its forecasted operating profit to around $50 million.

Its previous guidance, provided in February, was between $52 million to $56 million.

In the same month AHG also reported a $226 million first-half loss after a write-down of its franchised and refrigerated logistics businesses to the tune of $223 million.

Today, AHG said May and June are crucial months in the automotive retail sector and therefore will have a significant bearing on AHG’s full year performance.

It also warned the full-year result could be impacted by consumer behaviour around this weekend's federal election.

"While this review (of its refrigerated logistics division) is ongoing and the extent of its financial impact on the AHG Group is not yet certain, it may result in some write down of the division's receivables generated across one or more periods," AHG said.

AHG said it does not believe the profit forecast downgrade would affect the AP Eagers bid.

Last week the two companies entered into an implementation deed, after AP Eagers raised its all-scrip takeover offer to one share for every 3.8 AHG shares, to one for every 3.6 shares.

AHG shares were 1.68 per cent lower to trade at $2.34 each at 11.10amAEST.

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