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Eagers to please - profits to soar just a year after $2 billion disappointment

Business

Not much more than a year ago Eagers boss Martin Ward was lamenting a soft market and disappointment over the $2 billion merger with Automotive Holdings.

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At the time, Eagers’ half-year profit was down and its shares were falling with it.

What a difference a year of pandemic makes.

The company said it was now looking at an underlying operating profit before tax of between $195 million to $200 million compared with the $100 million it earned the previous year. Its shares jumped 6 per cent this morning.

The company said the guidance reflects the first full year of being a merged company, but car sales everywhere have gone through the roof in recent months as the public scrambled for new and used cars, motorbikes and bicycles – anything to get away from public transport and to escape restrictions.

The Federal Chamber of Automotive Industries has revealed 95,205 cars were sold in November 2020, an increase of 12.4 per cent compared to the same month last year and the best result in four years.

The biggest new-car markets NSW (30,343, up 13 per cent), Victoria (26,616, up 9.1 per cent) and Queensland (19,874, up 19.5 per cent) drove the majority of the sales growth. Year-to-date figures were down sharply but that was due to lockdown restrictions.

Travel restrictions have played a significant role in the growth in new-car sales, particularly of “getaway cars” such as heavy-duty four-wheel-drives, utes and SUVs, all of which have been in strong demand.

Eagers said its vehicle sales had rebounded strongly from the historic lows in April and May when lockdowns were in force.

“Customer orders have continued on their strong trajectory and supply constraints caused by global manufacturer factory closures during the June quarter have started to ease as demonstrated by the 12 per cent uptick in national vehicle deliveries recorded during November,” the company said.

“The industry’s tight inventory position, combined with the company’s cost reduction initiatives implemented following the merger with AHG and in response to COVID-19, have driven Eagers Automotive’s strong underlying trading performance.”

 

 

 

 

 

 

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