The nation’s biggest car dealer network, Perth-based Automotive Holdings Group, has shrugged off slowing automotive sales to lodge a record net profit result of $78.5 million.
AHG said revenue in FY2013-14 grew 9.8 per cent to $4.7 billion, contributing to an 11 per cent rise in net profit.
The company will pay a final dividend of 12.5 cents, taking its full-year dividend to 21 cents fully franked.
Managing director Bronte Howson said the solid results came despite challenges in its refrigerated logistics division and a slowdown in retail car sales stemming from slowing mining activity in Western Australia.
According to the latest VFACTS report from the Federal Chamber of Automotive Industries, new car sales were down 8.1 per cent in WA for the year to the end of July, and 2.1 per cent nationally.
Sales of Toyota LandCruiser utes, the predominant vehicle of choice for the resources sector, were down 16.4 per cent to the end of July, compared with the same period last year.
Mr Howson said AHG was able to buck the trend due strong performance from its established dealerships, as well as its new acquisitions.
In FY2014, AHG completed a series of acquisitions, including: the purchase of a New Zealand-based dealership in July last year for $NZ6 million; the $13 million purchase of Jason Mazda in Osborne Park; the $180 million acquisition of Scott’s Refrigerated Freightways and JAT Refrigerated Road Services; and the rights to distribute Husqvarna motorcycles in Australia.
“Once again we’ve benefited from strong performances from our established automotive dealerships while successfully integrating acquisitions and developing additional greenfield sites, all of which provide significant future upside,” Mr Howson said.
“The refrigerated logistics result reflects the impacts of disruption caused by flooding in NSW and Queensland and droughts in the Riverina, and more than $2 million in one-off start-up costs associated with new cold stores in Perth and Adelaide.
“These investments and our recent acquisitions provide a solid base for sustainable growth in shareholder returns in future years.”
Revenue in AHG’s automotive division was up 9.7 per cent, to $3.8 billion, delivering EBITDA of $132.5 million, an increase of 13.6 per cent on the previous year.
Mr Howson said the result came at a time when the new car market was experiencing a significant slowdown.
“AHG recorded increased sales with strong performances in used vehicles, finance, insurance, service and parts,” he said.
“These multiple revenue streams and efficiencies of scale underpin our operating model.”
AHG’s refrigerated logistics arm contributed revenue of $429.7 million, up 10.2 per cent on FY2012-13, for EBITDA of $29.7 million.
The group’s other logistics division increased its earnings by 10.6 per cent, to $421.4 million.
Mr Howson said AGH was well placed to continue to deliver strong returns.
“The automotive industry remains relatively strong,” he said.
“Even with the slight weakening in new vehicle sales, the FCAI’s national VFACTS forecast for calendar year 2014 would still represent the second-highest annual total of new vehicle registrations.
“And we remain very confident in our refrigerated logistics strategy following the acquisition of Scott’s and JAT.
“We see continued demand from our clients for our fully integrated service offerings in temperature-controlled transport and storage, allowing us to benefit from the recent acquisitions, continue our investment in facilities and leverage the identified synergies and the resulting significant economies of scale.”
At 10:30AM, WST, AHG shares were down 0.26 per cent, trading at $3.81.