AHG takes over KTM’s NZ business

Automotive Holdings Group Ltd will take over the importation and distribution for KTM Sportmotorcycles in New Zealand from August 1, representing a significant growth opportunity for the group.

Western Australia’s largest automotive retailer, AHG has been the Australian importer and distributor of Austrian-based KTM motorcycles since 1994.

From August, the group will become the exclusive importer and distributor for New Zealand.

In a statement to the Australian Stock Exchange, AHG chief executive officer Bronte Howson said the move into the KTM market in New Zealand represented a significant expansion opportunity for the group.

“From 160 unit sales in 1994, we have grown KTM sales in Australia to 4,982 bikes in 2005, through a dealer network that now stands at 62 nationwide,” he said.

“We will bring the same management and growth approach to the New Zealand business and believe we can build a similar market share across the Tasman.

“In Australia, KTM has a market share of around 6.5 per cent and in New Zealand, market share is 2.1 per cent, so there is substantial potential for growth under the AHG model.”

Mr Howson said AHG would hold a 74 per cent interest in the New Zealand business, with KTM-Sportmotorcycle AG to hold 26 per cent.

He said the New Zealand business would require minimal capital outlay to establish and would be earnings accretive in its first full year of operation.

KTM Sportmotorcycles Australia general manager Jeff Leisk said AHG’s success with its KTM operations in Australia made it an obvious choice to take over the New Zealand operations.

“AHG has demonstrated its ability to generate high sales of KTM Sportmotorcycles through the success of its operations in Australia, which we intend to replicate in New Zealand,” Mr Leisk said.

“Our assessment is that the market profile of New Zealand is similar to that of Australia, if not a touch better, given that off-road bikes account for 56 per cent of the market [54 per cent in Australia].”

AHG also made moves into the Victorian market recently, opening as one of the largest Hino truck dealerships in the country.

AHG also operates logistics businesses throughout Australia through subsidiaries Rand Transport (refrigerated transport and storage), KTM Sportmotorcycles (motorcycle importation and distribution) and AMCAP (motor parts and industrial supplies distribution).

AHG listed on the ASX in November last year after a $45.7 million capital raising and recently announced an interim net profit of $9.5 million on revenue of $795 million.

At the time, Mr Howson said the company was pleased with the December-half result and was optimistic of achieving the full year forecast net profit of $16.9 million.

“The performance of both our automotive retailing and logistics divisions was pleasing, despite strong competition and complex trading conditions in some sectors,” he said.

“We were also pleased to have protected operating margins through the period in both our operating divisions.”