AHG slumps on trading update
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Shares in Automotive Holdings Group slumped today after the company flagged challenging market conditions and a drop in retail margins due to regulatory changes.
AHG is now forecasting full-year net profit after tax of about $75 million after posting a $40 million profit for the half year.
In a statement to the ASX, the company said the recovery in Western Australia's private buyer market had been slower than expected, and margins continued to be affected by regulatory changes.
AHG shares were off 10.15 per cent at $3.06 each at 2pm AEDT.
AHG managing director John McConnell said the anticipated second‐half uplift in margins from the group’s franchised dealerships and used car businesses had been below expectations.
“Our retail automotive business is adjusting to the changes to finance and insurance sales more slowly than we would have liked and that’s apparent across the sector,” he said.
The company said its trucking division remained strong.
AHG also said the $400 million sale of its refrigerated logistics business, which was announced in November, was still awaiting regulatory approval.
“The (refrigerated logistics) business performed ahead of the previous corresponding period in the first half, however, second‐half trading has been impacted by the sale process and the relatively long lead time to completion,” Mr McConnell said.
“The sale process and associated due diligence has been a major undertaking for the refrigerated logistics management team over an extended period and at a time when the business is going through a significant transformation program and IT systems upgrade.
“We have discussed this with HNA and both parties are working towards completion, as previously advised, by June 30 2018.”