Automotive Holdings Group (AHG) is reporting a AU$22.9 million drop in profit for its latest annual result.
It saw net profit after tax of AU$32.6m for its 2018 results, down 41% from AU$55.5m in the same period last year.
However, revenue from the company’s automotive division was up 7.2% to AU$5.61 billion.
It continued to grow its new car and truck market share by around 6.7% in Australia and 3% in New Zealand.
Used car revenue through company dealerships and its easyauto123 business also grew strongly.
The Australian and New Zealand new vehicle markets “remain close to record levels despite the recent softening of consumer demand in the new car market in Australia”, AHG says.
During the year, the franchised automotive division suffered a AU$29m reduction to finance and insurance commissions.
“While not unexpected, this was a very significant hit to earnings, offset to an extent by cost reduction initiatives and a one‐off insurance income of AU$12 million,” the company says.
“Despite the challenging operating environment we have continued to invest both organically and by acquisition where we see value and future opportunity.”
This included acquisitions of five new dealerships in the Hunter Motor Group in NSW, two dealerships at Essendon Fields in Melbourne and two dealerships at Manukau, South Auckland.
The business also opened the Greenfield development of the new Essendon Jaguar Land Rover dealership.
“We have continued to invest in the easyauto123 business, which opened new fixed price used car warehouses at Brooklyn in Melbourne and at Hendra in Brisbane.
“Revenue for this business unit grew to AU$262 million incurring a AU$7.4 million loss as we established the operating locations.
“We remain excited by the opportunity in the heavily fragmented used car market to create a national brand, both physically and digitally, and drive returns.”
Meanwhile, its refrigerated logistics division reported revenue of AU$598.3m and increased operating margins but reported a loss of AU$2m primarily due to higher depreciation.
Second half revenue and earnings were impacted by the disruption and uncertainty caused by the failed bid by Chinese Group HNA to buy the business.
Revenue in other logistics was down 5% to AU$262.5m.
KTM and Husqvarna earnings were significantly impacted, primarily by foreign exchange movements and lower wholesale volumes, although the business grew its Australian market share for the combined brands.
“The year in review has been very challenging for the company and the franchised automotive sector generally but there are significant opportunities for growth,” AHG says.
