Shares in Morley-based Coventry Group Ltd have climbed over 3 per cent today following the announcement it had sold its loss making NSW automotive operations, trading as Coventry Auto Parts, to Burson Automotive Pty Ltd.
Shares in Morley-based Coventry Group Ltd have climbed over 3 per cent today following the announcement it had sold its loss making NSW automotive operations, trading as Coventry Auto Parts, to Burson Automotive Pty Ltd.
Coventry's CEO Chris Glenn, said, "The company's automotive business in NSW has incurred losses since it commenced operations in 1999 and there was little prospect of it achieving profitability and a satisfactory return on capital in the short to medium term."
The Coventry Auto Parts business incurred a trading loss before corporate overheads of $1.3 million (unaudited) for the 11 months ended 31st May 2006.
Only four of the six Coventry Auto Parts branches will be sold to Burson while its Mascot branch and the state distribution/administration centre at Liverpool are to be closed.
Burson has over 60 auto parts stores across Victoria, New South Wales,Tasmania and Queensland which predominantly focus on servicing automotive trade and retail customers.
Last month, the company released a 2005/06 forecast earnings update saying its automotive and industrial business units were facing softer trading conditions than expected and therefore anticipated its earnings before interest, tax and amortisation (excluding property sales) would be slightly below that of 2004/05 which was $22.3 million.
At market close, shares in the group were up 13 cents to $4.38.
Below is the full announcement:
Sale of New South Wales automotive operations
Coventry Group has today reached agreement to sell its automotive operations in NSW, trading as Coventry Auto Parts, to Burson Automotive Pty Ltd. The settlement date is 1st September 2006.
Under the terms of the sale agreement, Burson will acquire four of the six branches.
The Mascot branch and the State distribution/administration centre at Liverpool will be closed. However, the Liverpool customer branch will be relocated by Burson. A loss from exiting the business of approximately $1.4 million will be booked in the 2005.06 financial year.
The CAP business in NSW has an anuual turnover of $13 millio0n and incurred a trading loss before corporate overheads of $1.3 million (unaudited) for the 11 months ended 31 May 2006. The board's decision to sell was reached following a comprensive review by management of the CAP NSW business strategy and performance outlook.
Mr Chris Glenn, Coventry's CEO said "The Company's automotive business in NSW has incurred losses since it commenced operations in 1999 and there was little prospect of it achieving profitability and a satisfactory return on capital in the short to medium term."
CAP's operations in Queensland will not be affected by the NSW sale.
