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Long road ahead but Eagers reports a virus-driven boom

Business

Shares in Brisbane-based Eagers Automotive jumped 12 per cent today after the company released details of a boom in car sales.

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The 80-cent spike to $12 a share is the best share price result since November last year for the company.

The company said its underlying profit before tax for the nine months of the year to September 30 were $96.6 million, a 45 per cent increase on the same period last year.

The result has been mirrored at companies like Brisbane BMW and Motorcycle Holdings.

The Eagers result did not include extraordinary items like property sales, or restructuring costs or wage subsidies.

“In the Australian states and territories which are not currently locked down, vehicle sales have rebounded strongly from the historical lows experienced during April and May when nation-wide restrictions were in place,” Eagers said.

“While customer orders have been strong, supply constraints caused by global manufacturer factory closures during the June quarter have resulted in lower vehicle deliveries to customers.

“The reduced inventory position, combined with company’s cost reduction programs, initiated following the merger with AHG and in response to COVID-19, have led to a strong rebound in Eagers Automotive’s underlying trading performance.”

Earlier this month, Motorcycle Holdings forecast an underlying profit of more than $20 million for the first six months of the financial year, more than doubling its performance from the same period last year.

In May, Brisbane BMW reported a 70 per cent increase in sales.

The spike in sales has been attributed to consumers having more discretionary funds because they can’t travel overseas during the pandemic. Consumer sentiment has also been rising because of government stimulus measures.

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