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Eagers earnings outlook hit by global chip shortage

Business

Eagers Automotive has downgraded its profit guidance for the first half of the year as a shortage of chips along with Russia’s invasion of Ukraine and China’s lockdowns impact the supply chain.

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For the June half, Eagers said it would report an underlying operating profit before tax would be in the range of $183 million to $189 million, significantly down on the $214 million for the same time last year.

Net profit would be down from its $267 million last year to $225 to $240 million.

“The underlying performance of the business continues to benefit from a strong market where demand for new vehicles continues to materially exceed supply,” Eagers said.

“This has resulted in an increase in our record new car order book of more than 25 per cent since December 31, 2021.

“Supporting these conditions, our new car margins have remained in line with the very strong levels of 2021, while our finance performance remains materially above industry levels.

However, the delivery of new vehicles was expected to fall due to global issues including the shortage of semi-conductors which had been compounded by the Russia-Ukraine war and China’s lockdown.

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