Colonial Motor Co expects 2016 profit, dividends to match 2015

Friday 6th November 2015

Colonial Motor Co, the listed motor vehicle distributor, expects 2016 profit and dividends to be similar to last year as better growth in city dealerships offsets lower demand in rural areas.

Data published this week showed new vehicle sales had their strongest October month on record, with the annual tally heading for a new high. Still, sales of passenger vehicles were boosted by rentals which aren't supplied by the Colonial Motor Co., and commercial vehicle sales appeared to have plateaued as agricultural demand weakened. The company posted a 10 percent decline in after-tax trading profit to $16.3 million in the year ended June 30 as margins contracted for its car dealerships and demand for tractors was dented by weaker dairy prices.

"There's been a lift in confidence in the last month or so compared to the winter and that bodes well for us, so we're on track for a very similar year to 2015," chair Jim Gibbons told BusinessDesk at the company's annual meeting in Wellington. "We are seeing growth in our city dealerships while the provincial and rural dealerships are finding it more difficult."

This year's dividend was likely to be the same as last year's level of 33 cents a share, he said. Gibbons declined to comment on the outlook for margins this year.

The trucking market, which is the company's largest single subsidiary, is slowing down as demand from the dairy industry wanes, Gibbons said. Still, the movement of stock and other forms of agriculture were tracking better, he said.

New products in the passenger vehicle market would help drive demand, he said.

The company's shares last traded at $5.55, and have slipped 4.8 percent so far this year.

BusinessDesk.co.nz

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