Turners’ Annual General Meeting last week saw the company discuss some of the ‘change’ it has experienced in recent months, but also look forward to more positive developments.
Chairman Michael said he wanted to be up-front on a number of matters, including the loss of the IAG contract and the departure of long-term chief executive Graham Roberts.
Dossor admitted the loss of the contract will have a significant impact on the business.
“IAG account for approximately half the damaged vehicle insurance market in NZ and consequently their decision to take their business to Manheim will have a significant impact on the Turners business,” Dossor said, while explaining the loss was not down to Turner’s performance.
“IAG have made it very clear to our team that this decision was based on highly advantageous commercial terms and had nothing to do with the relationship IAG had with us, or any shortcomings in our service and operational delivery,” he said.
“IAG have advised us that Manheim have offered rates which are too good to turn down despite the significant operational risks associated with the change in partner.
“The Turners team are working hard on mitigation strategies to address the significant gap which will be left by IAG,” Dossor added.
The deal included damaged trucks.
Dossor gave little further detail on the departure of Roberts – but expressed confidence in his interim replacement.
“Graham Roberts and the Board agreed after almost 8 years of service that it was time for a change,” Dossor said.
“We have appointed Todd Hunter as the interim CEO and we are confident that the business is in safe hands as Todd has been with Turners for over six years and was most recently in the role of chief operating officer.
“The Board are working through a recruitment process for a permanent CEO and we expect to make an appointment in the next 3-4 months.”
Dossor also welcomed Dorchester Pacific’s investment in the company, and the experience of its managing director Paul Byrnes, who later in the meeting was voted onto the board.
“I believe the investment by Dorchester is a positive for the company,” Dossor noted.
“The Dorchester investment signals there are companies who see long term value in this business, and we anticipate there will be benefit in having a significant shareholder coming on board which has expertise in the finance and insurance market.”
In a review of 2012, Dossor called revenue growth of 4% and group net profit after tax of 4.2% satisfying.
Key areas of Turners’ business showed strength:
“We have continued to develop our alternate sales channel BuyNow within the cars business, the Damaged Vehicle business grew solidly, and our commercial division continues to gain traction in the market with the National Auction format working extremely well,” Dossor said.
“The Fleet business has really been a tale of two cities,” he explained. “Our used Japanese Import business was very challenging in 2012.
“Unfortunately 2012 was a year when emission regulations changed, and this coincided with importers undertaking a large stock-up prior to the change. This led to a situation of over-supply and the resultant margin pressure lasted longer than we would have preferred. I am happy to report we have seen an improvement in trading margins for the Japanese used import product in 2013,” Dossor said.
“On the flip side our CashNow offering, where we are buying directly from the public, continues to deliver good volume growth to the auctions business.”
The company’s finance ledger grew by 10%, and it invested in resources to aid customer attention.
Dossor also noted the recently launched website development, including mobile optimisation.
A new operating system is also nearing launch.
“As you can see there is large scale change going on in the business and these new technology platforms provide much more flexibility and agility to the business.”
Dossor also commented on changes to consumer protection legislation that will see consumers receive increased protection when buying from a business through all channels – including auctions.
“Clearly this means that business vendors take on more risk through the auction channel than they currently do,” Dossor said. “On balance, we believe these changes will also benefit trusted brands such as Turners because we can attract more buyers to an auction channel that is “de-risked” for private buyers.
“There is also the opportunity for Turners to offer business or trade only buyer events for vendors who prefer to have no CGA risk, and potentially to offer products to vendors to offload their CGA risk onto Turners if they sell to a consumer,” he explained.
