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Turners boosts earnings amid slow used car market

Friday 20th August 2010

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Turners Auctions lifted its first-half profit 6.1% amid a slow recovery in the used cars market from 2009's lows.

Net profit for the six months ended June 30 rose to $1.5 million from $1.4 million in the same six months last year.

Used car registrations fell 5% in 2009, a year Motor Industry Association chief executive Perry Kerr has described as “appallingly bad,” on top of 2008's 9% drop.

Turners says the total New Zealand used vehicle market is up 5% year-to-date on the same period last year and used Japanese imports are up 82% to 44,109 units, “signaling the market has moved back into a situation of over-supply”.

Turners' sales rose 4.1% to $36.2 million in the six months, mainly due to higher unit sales by its Turners Fleet, its importing division, strong growth in interest revenue as its finance book grew and increased insurance commissions from sales of motor vehicle breakdown insurance policies, the company says.

The finance book grew 27%, or $3.7 million, to $17.6 million at June 30 from a year earlier.

“This growth has come from a combination of strong loan sales and a reduction in the proportion of loans settled early,” it says.

The outlook is still unpredictable but there are some positive signals for key revenue lines.

“Market share for the cars business is on the rise and we are experiencing excellent growth in the trucks and heavy machinery business,” Turners said.

“The commercial business continues to enjoy the counter-cyclical aspects of an economy under pressure with many receiverships and liquidation sales taking place.”

Turners will pay a fully imputed 5 cents a share first-half dividend, the same as last year's payout. Turners' shares closed at $1.26 yesterday. They have fallen from $1.60 in April but are well up on their record low at 42 cents in late 2008.

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