CMO - Preliminary result and dividend

Thursday 18th August 2022

The Chairman, Ash Waugh, today announced a new record Trading Profit after Tax for the 30 June 2022 financial year of $33.35m. This result has eclipsed the record profit of $27.92m for the previous financial year by 19%.

He said that, as reported in February, trading conditions over the first six months of the financial year were very strong, with all of our trading operations delivering outstanding results. The clean vehicle tax, that came into effect on 1 April 2022, created an incentive for customers to purchase before that deadline. This was particularly evident in the Light Commercial segment where virtually all vehicles now incur the tax.

Mr Waugh confirmed it was not unexpected that the final quarter was more challenging than the previous three, with a gloomy economic outlook and continued supply constraints post March combining to slow our car operations. Despite these challenges, our truck and tractor dealerships maintained momentum and, collectively, the team across the Group has delivered an exceptional result with total revenue just over $1.0 billion.

On the property front, Mr Waugh reported the major refurbishments to Avon City Ford, Timaru Motors and Dunedin City Motors are well underway. We continue to be impacted by rising building costs, supply shortages and labour constraints in the construction sector. This has slowed a number of projects and required the deferment of others. He also advised the Company has purchased a well-situated property on Ti Rakau Drive in Auckland to support our brand representation in the East Auckland region.

The Directors have declared a fully imputed dividend of 47 cps to be paid on Monday, 3 October 2022, with a record date of Friday, 23 September. This will take the total dividend for the year to a record 62 cps, 61% of the Trading Profit after Tax.

Mr Waugh said registrations for the seven months to July 2022 for new and used vehicles had softened relative to 2021, down 7% and 2% respectively. He pointed out that March was a registration anomaly, driven by the clean car tax. In the period since March, new vehicle registrations have been down 20% and used 37% over the four months. We anticipate the industry will recover to a degree but a softer trajectory will likely be maintained over the medium term.

Supply, particularly for EVs, remains constrained due to both global availability of raw materials and manufacturing capacity. This will mean an element of erratic local supply and continued longer than normal lead times for desirable product, Mr Waugh said.

He commented that, high fuel prices and other inflationary pressures are taking their toll on consumer confidence and the Group will not be immune from these effects. We have confidence in the next generation products arriving in-market over the coming year and together with a steady demand for tractors and heavy trucks, these factors should allow us to remain competitive in all the segments we trade in.

Mr Waugh announced that Matthew Newman will be retiring from the Board at the conclusion of the Annual Meeting in November. The Directors have appointed John Hutchinson, CEO of the Group subsidiary, Hutchinson Motors Limited in Christchurch, as a director with effect from 1 September. John will stand for election by the shareholders at the Annual Meeting.

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