Eagers announces new era as profit returns and Ward steps down
Eagers Automotive has reported a bumper profit but the man who got them there, Martin Ward, will step down as chief executive after 16 years.
AP Eagers chief executive Martin Ward.
The Brisbane auto retailer produced a net profit of $156 million for the 2020 full year on revenue of $8.7 billion. A dividend of 25 cents a share was declared.
The result compared to a $139 million loss in 2019 but that included significant writedowns following the AHG merger.
Investors responded by selling off the stock. Its shares were down almost 9 per cent in morning trade.
In 2020, Eagers was not only hit with the pandemic restrictions but also the exit of Holden and this led to an impairment of $80 million, but it has forecast “tail winds” in 2021 and had seen early momentum.
But Keith Thornton, who will replace Ward, said about 20 million units a year had been taken out of global production and there was no way of knowing whether those supply issues would continue.
Thornton said an example was that a producer of a microprocessor used in vehicles was diverting supply to gaming consoles because there were better profits available.
Manufacturers were also using shutdowns overseas to retool for electric vehicles.
He said demand was strong, but the company had to be cautious about the outlook because of external factors from the pandemic.
The company’s property portfolio had grown to $470 million and Ward’s new role would be to manage that and its investments in assets such as the Brisbane Airport Auto Mall.
In its result, it said the pandemic had driven unprecedented fluctuations in the market from historic low sales in April and May to a breakthrough in November when sales growth broke a 31-month period of falling new vehicle sales.
The company was forced to sack 1200 workers before JobKeeper was introduced but it said the wage subsidy then saving another 2000 jobs. The company received $133 million from the JobKeeper program and it was paid to about 6000 employees.
The profit result was the first to fully include its acquisition of AHG and Eagers said synergies were now worth about $100 million.
Ward said the improved conditions that had started in November had flowed through to the current year. Its order book was strong and long-term organic growth prospects were strong.
The company also said its balance sheet would enable it to pursue growth opportunities.
