Profit down for auto dealer AHG
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West Perth-based Automotive Holdings Group has predicted the state’s automotive market will remain challenging in the short term, as the company reported a 20 per cent fall in net profit after tax in the six months to December.
AHG reported NPAT of $38.6 million, with the company’s refrigerated logistics business producing a reduced profit.
Automotive sales margins were steady, as strong east coast performances offset ongoing weaknesses in Western Australia, the company said.
Truck volumes were also weak in the first half, but have started to pick up since the new year began, AHG said.
EBITDA fell 3.9 per cent to $108.1 million, while revenue was up 7.6 per cent to $2.96 billion.
That included a 7.2 per cent revenue fall for refrigerated logistics.
Looking forward, the company is undertaking a transformation program in the refrigerated logistics business, and will expand its easyauto123 warehouses, managing director John McConnell said.
“As expected, the first half result in refrigerated logistics was in line with the trend we saw in (the second half )of FY2016,” Mr McConnell said.
“The transformation program is expected to deliver stronger earnings in the second half.”
He said there was a risk to the industry from a regulatory review under way.
“The current ASIC and ACCC reviews of finance and insurance commissions, once finalised, will most likely lead to industry‐wide changes to the revenue mix and cost base at dealership groups and the relative shares of vehicle sales margins, finance and insurance sales, aftermarket and vehicle servicing,” Mr McConnell said.
“We expect these changes to commence across the industry after the current financial year with an extended transition period.
“What we do not expect to change is AHG’s position as Australia’s largest automotive retailer, and one of the best places for consumers to buy a new or used vehicle, along with convenient complementary products and strong after‐sales support.”
Shares in AHG were 4.2 per cent lower at $3.90 at the close of trade.