Turners Auctions has announced a half year net profit after tax of $2.1 million – 10% ahead of the same period last year.
And profit for the full year is now expected to be closer to the profit for last year.
“At the April 2013 AGM we advised that the loss of the IAG damaged vehicle contract was equivalent to a 15% reduction in net profit for the full year.,” says CEO Todd Hunter.
“However, based on first half trading and early results from our mitigating strategies, we now expect our full year net profit to be closer to the 2012 profit of $4.2m.”
Total revenue for the first half of 2013 was $41.8 million, an increase of 13%.
“The first half result has been driven by improving profits in our ‘fleet’ and ‘finance’ business units, offsetting a lower contribution from ‘auctions’,” says Hunter.
“In the first half the ‘auctions’ segment increased revenues by 3% due to an increase in ‘damaged vehicle’ volumes. However, this increase was offset by higher costs than usual due to one‐off restructuring costs, the development and launch of a new website, and increased promotional activity supporting our CashNow (domestic vehicle purchasing) initiative.
“As a result operating profit from ‘auctions’ reduced by 22% to $1,104,000.
“The ‘fleet’ operating profit improved by 63% to $981,000 and revenues increased by 24% to
$21.2m. Domestic purchases of vehicles through the CashNow service have increased significantly, based off a more aggressive buying and marketing strategy'” adds Hunter.
“Unit sales of Japanese imports were flat in the first half compared to 2012, however the margin per unit has improved through higher BuyNow retail sales and improvements in our supply chain costs.
“Turners ‘finance’ operating profit has increased by 28% to $907,000. This is a result of higher interest margins and growth in the loan ledger to $22.1 million. An increase in BuyNow retail sales is creating better opportunities to attach finance contracts to vehicle sales,” says the CEO.
Turners’ directors have declared an interim dividend of 7 cents per share (2012 interim dividend 7 cents per share). This dividend will be fully imputed and will be paid on September 19.
Hunter says that performance in the first half has been stronger than expected.
“The business has made good progress in the first half on implementing a multi‐channel sales strategy. Cost management will continue to be a focus along with securing alternate sources of stock,” says Hunter.
Further information is included in Turners Auctions half year investor presentation, aavailable on the NZX website [www.nzx.com].
