Economy

Shares tumble at Pendragon as profits threatened by falling new auto sales

Shares tumble at Pendragon as profits threatened by falling new auto sales”

Shares in the UK's largest auto dealership Pendragon dropped as much as 23 per cent this morning after it became the latest United Kingdom firm to warn on profits.

Pendragon said it now expected a pretax profit of 60 million pounds ($79 million) in 2017 versus previous market expectations of 75.2 million pounds, according to Reuters data, and 75.4 million pounds made in 2016.

'The decline in demand for new cars and the consequent used vehicle price correction has impacted this year's profit outturn and we anticipate that our full year underlying profit before tax will now be approximately £60 million, ' it said in an interim management statement and strategy update issued today.

A statement from the firm said: "During the quarter as consumer confidence waned we experienced significant market pressures".

Chief executive Trevor Finn, pictured, said: 'Following a strategic review, the board is now committed to focusing on reshaping the business to accelerate transformation.

Pendragon shares - down around 7% this year so far - were 15.5% down in late morning trade.

Meanwhile, Pendragon also revealed that chairman Mel Egglenton is to step down as chairman "for personal reasons".

"During the quarter (to September 30) as consumer confidence waned we experienced significant market pressure", it said, adding it expected to return to profit growth in 2018.

The firm says it will concentrate on putting its software "at the heart" of the business as it enters 2018.

On used cars it experienced price falls, primarily in premium brands as pre-registered cars hit the market and forced down almost new and used values.

Pendragon, which trades as Evans Halshaw and Stratstone in Britain, said it expected the new vehicle market to continue to decline this year and the first half of 2018 as manufacturers continued to adjust to the reduced level of demand.

Pendragon added that margins on its second-hand cars have started to pick up again, which should help it return to profit growth next year.

Part of the reason for its optimism is Pendragon's plan to double its used auto revenue over the five years to 2021.



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