Friday, May 29, 2020

COVID-19 sees Pendragon take £10m hit

COVID-19 has seen Pendragon, the Nottingham-headquartered car retailer, take a £10m hit in its first quarter, according to a trading update covering the period from 1 January to 31 March 2020.

The company’s performance during the first two months of the quarter was “encouraging,” with a £5.1m improvement in underlying profit before tax to the end of February compared to the same period in FY19.

Trading in March however was significantly impacted by lockdown measures and the closure of all Pendragon’s retail locations on 23 March, which the firm notes is a key trading period for both new and used cars.

It is estimated that the slow-down in trading impacted underlying profit before tax by £10m in the quarter, with the Franchised UK Motor division being the most affected.

As a result, the Group recorded an underlying loss before tax of £2.3m for the quarter, an improvement of £0.5m from the Q1 FY19 underlying loss before tax of £2.8m, despite the significant negative impact of COVID-19 disruption.

Underlying operating profit in the Franchised UK Motor division was £4.4m, a decline of £4.7m in comparison to Q1 FY19.

The COVID-19 driven reduction in the Franchised UK Motor division operating profit was more than offset by a £6.0m improvement within the Car Store division, where underlying operating losses of £1.0m were recorded (Q1 FY19: £7.0m).

Bill Berman, Chief Executive Officer said: “I would like to take this opportunity to recognise the way in which our associates have responded to the challenges posed by the COVID-19 pandemic and to thank them for working to keep key workers on the move over the past two months.

“The actions we took during the second half of 2019 to focus on costs and to reduce used stock levels started to show results both during that period and on into the first quarter of 2020, resulting in increased profitability in Q1, despite the impact of the pandemic.

“The commercial consequences of a full lockdown have obviously affected the business, but we moved quickly to implement a broad range of actions to mitigate the enforced closure, and I am confident that we will emerge in a strong position as the current restrictions ease.

“We are now preparing to reopen from 1 June and will therefore have the capabilities in place to meet the full needs of our customers across new, used and aftersales, as well as driving our “We come to you” online offer.”

Pendragon initially reopened around 20 service centres during April (out of 145), to either service or repair vehicles for key workers or for customers who depend upon having access to a vehicle.

As demand has started to return, the Group has reopened more of its service centres, with a total of 125 open as of today, operating at a reduced capacity with around 20% of total technicians currently now returned to work.

It currently expects that dealerships will be able to open, with compliant social distancing measures, from 1 June.

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