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Colonial Motor Co lifts annual profit 13% on buoyant car market

Thursday 23rd August 2018

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Colonial Motor Co lifted annual profit 13 percent as a buoyant car market drove the motor vehicle distributor closer to cracking a billion dollars of revenue. 

Net profit attributable to shareholders rose to $25 million, or 74.6 cents per share, in the 12 months ended June 30, from $22.2 million, or 67.3 cents a year earlier, the Wellington-based company said in a statement. Revenue rose 5.8 percent to $904 million as the motor vehicle distributor enjoyed another year of record new car registrations. Still, chair Jim Gibbons was cautious about the year ahead, saying the pace of growth has slowed. 

"There are currently a myriad of mixed messages influencing the confidence of business and consumers that could influence the medium-term outlook for the economy and our industry," he said in a statement. 

New Zealand's auto market has gone through a purple patch where an expanding population, strong currency, low interest rates and record tourist numbers underpinned demand for vehicles. That activity has attracted interest from Australia, including ASX-listed autoparts firm Bapcor, which this week said it plans to expand the New Zealand business it acquired in 2016. 

Colonial Motor is still investing in new and expanded facilities for its dealerships, with capital spending rising to $14.1 million in the year from $11.8 million a year earlier. The company's operating cash was an outflow of $7.4 million, compared to an inflow of $15.8 million in 2017. 

Gibbons said the heavy truck industry registered stronger growth in the June year, increasing both volumes and market share. 

"This increased activity is reflected in the balance sheet current assets," he said. The company's inventory grew to $181 million as at June 30 from $147.8 million a year earlier, while bank debt grew to $41.6 million from $7.8 million. 

The board declared a final dividend of 35 cents per share, payable on Oct. 15 with an Oct. 5 record date. That takes the annual payment to 50 cents, up from 44 cents a year earlier. 

The shares were unchanged at $8, and have gained 5.3 percent so far this year. 


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