January 29, 2020 / 7:23 AM / a month ago

UK car dealer Pendragon flags soft demand ahead of December election

(Reuters) - Auto dealership Pendragon Plc (PDG.L) said its expectations for a full-year loss had not been tempered by a better second half after demand for cars suffered in the run-up to the December elections, hurting the performance of its largest unit.

Shares were down 4.5% at 11 pence in morning trade.

The company’s full-year performance expectations have not changed since it issued a profit warning in September, saying its annual underlying pretax loss would be at the bottom end of expectations.

Pendragon, which operates the Evans Halshaw, Stratstone, Quickco and Car Store brands, said its largest division, the franchised UK motor business, had been hurt by “a challenging consumer environment” in the final quarter.

Industry data showed the number of new cars sold in Britain last year fell to its lowest since 2013 as consumers held back from purchases amid increased restrictions on diesel vehicles and ongoing economic uncertainty ahead of Brexit.

Liberum estimates Pendragon’s pretax loss at between 12 million pounds ($15.77 million) and 18.6 million pounds.

The brokerage said the company remained its least preferred stock in the sector, given its “need for material business change in a tough trading environment”.

Pendragon, which has scrapped its dividend and seen the departure of two chief executives in the last year, also faces industry-wide problems including weak sales, stricter emissions regulations and a shift towards electric or hybrid cars.

Its peers Lookers (LOOK.L) and Inchcape (INCH.L) have also reeled under pressure from the weakness in the auto industry coupled with rising labour costs for skilled technicians and a squeeze on margins.

In September, Pendragon said it had been pushed into a half-year loss in the first six months of the year after making deep price cuts to offload used car inventory.

However, on Wednesday it painted a brighter picture for 2020 as an in-line second-half performance at its other divisions put it on “a much stronger footing” entering into the year.

The company has been closing underperforming Car Store locations, improving management of used car inventory and controlling costs.

Reporting by Yadarisa Shabong in Bengaluru; Editing by Shounak Dasgupta and Jan Harvey

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below