Automotive Holdings Group has posted a $60.3 million 2010 financial year profit, up 150 per cent on last year, and its Rand Transport logistics division has flagged a 2012 expansion into Western Australia.
Automotive Holdings Group has posted a $60.3 million 2010 financial year profit, up 150 per cent on last year, and its Rand Transport logistics division has flagged a 2012 expansion into Western Australia.
The profit includes the sale of carsales.com shares in September 2009 which netted the company $5.2 million.
The company's directors have declared a final dividend of 10 cents, bringing the full year fully franked payout to 17 cents.
AHG Managing Director Bronte Howson said the record result was underpinned by improved economic conditions, particularly for the automotive retailing sector.
"Our automotive division had a strong year off the back of buoyant new vehicle sales," said Mr Howson.
He said AHG maintained a cautious outlook for the 2011 financial year with interest rates expected to rise and retail sales and consumer and business sentiment slowing.
"We are buoyed however by indications that full time and part time employment remains strong", said Mr Howson.
Mr Howson told WA Business News the result was particularly pleasing coming off a "credible" profit result last year coming out of the global financial crisis, and recovering from a low profit base of $7 million in the first quarter of 2009.
"We were very happy with the result last year, and I suppose that result continued on into this year," he said.
"For me the pleasing things were we lifted our margins and lifted our revenues and I think re-established the automotive business back to being our key focus.
"Automotives were what the company was born on and we just needed to ensure that in 2010 we really put the efforts into that."
AHG's logistics and transport business had a slight downturn in its profit from last year, mainly due to a downturn in demand in its KTM motorcycles division.
Mr Howson said AHG's eastern states-based refrigerated transport division, Rand Transport, was well placed for growth, and said the firm was also eyeing off a WA expansion.
Rand Transport will increase its operating capacity by 50 per cent with new cold storage facilities opening in Victoria and Queensland, in September and December, respectively.
"Going forward our next project in Western Australia, and our intention is to have a new facility here in Western Australia by late 2012," Mr Howson said.
"Once these two projects are off, 2011 is all about planning for the future of Rand in WA."
See full company statement below:
Automotive Holdings Group Limited (ASX: AHE), Australia's largest automotive retailer, today announced a record net profit after tax of $60.3 million for the year ended 30 June 2010. This includes the profit on the sale of carsales.com shares as announced in September 2009. The underlying profit, net of the sale of carsales.com shares was $55.1 million and represents a 30.5% increase on pcp on Group revenue¹ of $3.2 billion (5.4% increase on pcp).
EBITDA¹ was $116.0 million (14.7% increase on pcp) and EBITDA¹ margin was a credible 3.6% (8.8% increase on pcp).
Earnings per share was 26.7 cents (12.4 cents pcp - an increase of 115%). Earnings per share excluding unusual items¹ was 24.4 cents compared to 21.7 cents pcp. The Directors have declared a final dividend of 10 cents, bringing the full year fully franked payout to 17 cents (pcp 14 cents). The record date is 17 September 2010 with the dividend payable on 1 October 2010.
AHG Managing Director Bronte Howson said the record result was underpinned by improved economic conditions, particularly for the automotive retailing sector.
"Our Automotive division had a strong year off the back of buoyant new vehicle sales," said Mr Howson.
"The Automotive result included a 48.9% increase in profit before tax to $62.9 million ($42.2 million pcp) which reflects lower interest rates and improved vehicle registrations experienced during the year.
"Our Logistics division provided a creditable contribution to the Group's underlying profit given challenging market conditions in particular business segments.
"Strong performance was recorded from our Transport and Cold Storage segment with EBITDA up 12.5% on last year. However the overall Logistics profit before tax of $16.6 million (pcp $19.3 million) was impacted by a 13% decrease on pcp in the national motorcycle market and reduced storage demand for our vehicle storage operation.
"AMCAP continues to provide a steady contribution", said Mr Howson.
Logistics EBITDA was $27.2 million ($27.6 million pcp) while EBITDA margin was similar to that achieved last year.
Automotive
Underlying EBITDA for the Automotive retailing division was $88.8 million increasing from $73.5 million pcp - a 20.8% improvement, on revenue of $2.9 billion ($2.7 billion pcp), representing a 6.2% increase pcp.
EBITDA margin also improved to 3.1% - a 13.8% increase on FY2009 (2.7% pcp).
Mr Howson said the division's performance, was driven by increased vehicle sales from lower interest rates and from stronger consumer and business confidence that impacted positively on all revenue streams.
"While New South Wales, Western Australia and New Zealand operations produced strong results, we did not experience the same performance levels from our Queensland operations which experienced softer economic conditions and vehicle sales.
Logistics
Mr Howson said it was an exciting time for the Rand Transport business which is set to open a new Melbourne distribution and cold storage facility in September.
"The new Melbourne facility will have an immediate impact, relieving pressure on our Sydney operation which is experiencing sustained high customer demand and running at near capacity," said Mr Howson.
"The new Melbourne facility will also be fully operational for Rand's peak pre-Christmas period while the construction of the Brisbane facility continues and will be opened later in the financial year.
"Together the two operations will increase Rand's storage capacity by more than 50% to 66,000 pallets from 42,000 pallets currently.
"During the year, AMCAP continued to deliver creditable, consistent revenue and profits for the Group, while KTM performed well in tough market conditions.
Revenue for AHG's logistics division increased to $382.3 million ($381.9 million pcp) while its EBITDA was in line with last year's result.
Outlook
AHG maintains a cautious outlook for the 2011 financial year with interest rates expected to rise and retail sales and consumer and business sentiment slowing.
"We are buoyed however by indications that full time and part time employment remains strong", said Mr Howson.
"We have a strong balance sheet and a number of exciting automotive and logistics developments underway".
"As recently announced, the purchase of land in Sydney's Castle Hill automotive precinct is earmarked for development of greenfield sites into an automotive hub, similar to our Wangara and Rockingham operations in Western Australia.
"The property is situated at the high visibility intersection of Victoria Avenue and Windsor Road, Castle Hill. The site is 43,000 square metres and has approximately 650 metres of street frontage. Discussions are continuing with several manufacturers.
Some dealerships within the Group have been identified for redevelopment over the next 12 months to accommodate growing demand and we are also pursuing opportunities from manufacturers not currently represented by AHG.
"We look forward to an improved economic outlook in Queensland and efficiencies achieved from the actions we have implemented over the past few months.
"Logistics will benefit from the contribution from Rand Transport as its new facilities come on stream.
"We will also continue to assess potential acquisitions and pursue those that complement our current portfolio and meet our strict acquisition criteria."
