Car dealership giant Pendragon issues profit warning
12 June 2019, 07:19 | Updated: 12 June 2019, 19:07
Shares in car dealership giant Pendragon slumped by a fifth on Wednesday, after it warned that the first half of 2019 is "expected to be significantly loss making".
The company behind the Evans Halshaw and Stratstone car dealerships said it will see a full-year pre-tax loss for 2019, as excess stocks of used cars dragged on growth, in a "challenging market".
The company declined to specify figures for the "modest" anticipated full-year loss overall, but it expects losses incurred in its car store operations to "accelerate to £25m" during 2019, up from an £11.9m deficit in 2018.
It said those losses come mainly as a result of "execution inefficiency" and the impact of excess used car stock during the first-half of the year.
Pendragon said in its trading statement: "A significant increase in used car stock at the end of 2018 resulted in an excess of stock held across the business."
It held used car stock to the tune of £458m at the end of 2018, up from £372m in the previous financial year.
The company added that lower than anticipated new car margins and an increase in costs, particularly in aftersales, also stunted profitability.
It said discussions for the disposal of the rest of its US motor group were continuing, after Pendragon said it would exit the American market in 2017.
Pendragon chief executive Mark Herbert said: "Notwithstanding the challenging market and uncertain macro outlook, the expected loss for the year is still disappointing.
"That said, we see significant addressable opportunities to improve the business and return to profitable growth.
"We are continuing to work on our review of the business ahead of our strategic update in September, but I am confident there are real opportunities for self-help that will improve the performance of the core UK motor and leasing businesses."
(c) Sky News 2019: Car dealership giant Pendragon issues profit warning