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Colonial Motors under pressure

By Phil Boeyen, ShareChat Business News Editor

Thursday 23rd November 2000

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The Colonial Motor Company (NZSE: CMO) has confirmed an earlier earnings warning at its AGM today and says a variety of factors are putting pressure on its current year returns.

When the company released its full year result in September it said business was slowing due to the retail downturn, and today shareholders were told that while first quarter sales are slightly ahead of last year, profits are marginally lower and metropolitan sales and profitability is dropping.

The company says an increase in trading activity in rural and provincial areas is not sufficient to offset the lower metropolitan results, with customers continuing to resist price increases caused by the lower New Zealand dollar.

There has also been a swing to European vehicles given the favourable exchange rates.

CMO says its Auckland Auto Collection, which is a new business made up of nine previously separate dealerships, is continuing to provide a 'significant challenge' to the company.

It says the current consolidation of the existing Ford operations, and the integration of the Mazda dealerships, is occurring in a period of downturn, which is impacting on both new and used car sales in Auckland.

Last year CMO lifted its full year profit by 20% to $7.853 million, but it says returns are expected to fall in the current year due to the negative factors which are affecting sales.

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