Turners lifts first-half profit 28% but warns about the outlook

Tuesday 27th November 2018

Turners Automotive lifted first-half net profit 28 percent and says strong performance from its insurance business offset a country-wide slowdown in the vehicle retailing sector.

The company is also foreshadowing that its full-year result could be impacted if current market conditions persist.

Nevertheless, the company plans to buy back up to 5 percent of the company’s shares because directors think the current share price undervalues the company.

The shares closed at $2.72 on Monday and have fallen about 14 percent in the past 12 months.

Net profit for the six months ended September rose to $12.8 million from $10 million a year earlier.

The latest result also included a $3.4 million gain on the sale of property at Wiri south of Auckland which Turners has leased back in line with its strategy of optimising its real estate.

It was struck on a 3 percent increase in sales to $168.3 million for the six months.

Baker says if October market conditions continue, pre-tax profit for the full year could be impacted by 5-10 percent from the company’s previous guidance of $34-36 million.

The company says its cost of goods sold fell 9 percent to $65.3 million because it sold more vehicles on consignment through Turners’ auctions and therefore owned less stock.

“The business has shown some resilience through tough market conditions in the first quarter and bounced back strongly in the second quarter,” said Baker.

“The diversified revenue streams have really demonstrated their value through the first half of this year. However, market conditions, particularly in the used import car market, remain challenging and pressure is being placed on vehicle margins right across the industry,” Baker said.

“Within the key market of Auckland we have seen a material reduction in demand which we attribute to the cost pressures being experienced by many people across the Auckland region in fuel prices, rents and other household costs.”

Turners will pay a quarterly dividend of 4 cents per share, taking dividends for the first half to 8 cents, up from 6 cents last year.

(BusinessDesk)

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