Pendragon reports strong first half results but rate hikes spark concern
Pendragon said this morning it expects pretax profits to rise nine per cent for the first half of 2023, on the back of a strong performance from its motor division.
In a trading update, the Nottingham-based motor dealership – which is behind brands including Evans Halshaw and Stratstone – said it expects underlying profit before tax to reach £36.5m, up from £33.5m last year.
Its UK motor division performed particularly well, with sales of new vehicles up 18.3 per cent and used vehicles up 7.2 per cent on a like-for-like basis.
Strong showings from two subsidiaries in the first half – Pinewood and Pendragon Vehicle Management – coupled with the bumper UK motor profits, helped offset £15m of cost pressure from inflation and higher interest rates, Pendragon said.
It warned, however, that high inflation and increased interest rates could still affect consumer sentiment and dent demand in the second half.
Bill Berman, chief executive of Pendragon, said: “Increased sales across all divisions and higher profitability more than offset cost pressures, resulting in a strong cash position.
“While we expect high inflation and interest rates to persist in the second half of the year, our resilient model means we are well placed to perform in line with board expectations.”
The firm also noted an improvement in the production and supply of new vehicles during the first half, although used vehicle supply is expected to “remain tight” for the foreseeable future.
The motor retailer has had a turbulent few months, with media reports suggesting chairman Ian Filby will step down from the company amid pressure from investors.
The company has also seen its shares tumble since the collapse of a 400m takeover approach from Swedish car dealer Hedin Group in December.