The Colonial Motor Company’s heavy truck arm Southpac has been hit by falling volumes, even as the group reported a trading profit after tax of $17.83 million for the year ending June 30.
Chair Ash Waugh told shareholders the Southpac business had faced a difficult year, with trucking volumes down in all but the dairy and agribusiness sectors.
Inventory was being held for longer periods across the industry, creating “an aggressive trading environment,” he says. Model changes for Kenworth and DAF had also added “layers of complexity” to sales, marketing and inventory planning.
Despite those headwinds, the NZX-listed company delivered what Waugh described as “a better than expected result” given the patchy state of the vehicle market. The figure was almost unchanged from last year’s $17.88m trading profit.
Waugh says new passenger cars, light commercial vehicles and trucks had all been affected by a sluggish economy and high stock levels, particularly in North Island metro markets.
“On the other hand, used car operations across the group had demonstrated strong growth and contributed positively to the overall result,” he says.
The total new vehicle market for the year to June was up just 1.3% to 63,458 units, but commercial sales fell 18.4%.
“The Ford Ranger had protected its share in this reduced market but the decline in that segment is of some concern, as this has been a ‘sweet spot’ for a number of years now,” Waugh says.
“The good news is the recent introduction of the hybrid Ranger into this segment, along with the Ranger Super Duty, will further enhance our Ford dealers’ light commercial range in the future.”
Waugh confirmed the group’s investment in JAC Motors would continue despite tough competition.
“We remain confident the ongoing commitment to the JAC brand is an important strategic investment in a Chinese sourced product range.”
Other highlights included securing the Mitsubishi franchise in Manukau, with the new Manukau Autos dealership now operating, while Southern Autos has shifted its central hub to Botany Road.
On the property side, the rebuild of Fagan Motors in Masterton has been completed, a new Avon City Ford facility in Rangiora is operational, and land has been purchased in Queenstown to support long-term growth.
Waugh says all sectors of New Zealand, except agribusiness, were awaiting the benefits of falling interest rates and Government policy changes.
“We certainly see a two-speed economy in New Zealand, with on the downside we have Metro North Island while on the upside the South Island and Rural New Zealand,” he says.
“Until our Metro areas in the North Island and the truck business enjoy the same trading environment, we maintain a cautious watching brief.”
The directors declared a fully imputed dividend of 20 cents per share to be paid on October 6, taking the total payout to 35 cents — matching the previous year and equal to 64% of trading profit.
