Pendragon warns over annual loss
Car dealer Pendragon, which includes Evans Halshaw and Stratstone, has warned that it expects to slide to a small annual loss amid a tough market and "internal operational challenges".
The firm said it is set to be "significantly" loss-making in its first half, before returning to profit in the final six months.
It had previously guided for 2019 results to be broadly in line with the previous year, when it reported an underlying pre-tax profit of £47.8 million.
There are Evans Halshaw dealerships in Shrewsbury, Stourbridge, Walsall, Worfield and Wolverhampton and Stratstone sites in Stourbridge and Wolverhampton.
The company blamed a challenging car market, but also revealed widening losses in its Car Store vehicle supermarket arm, high levels of used car stocks left to shift, one-off costs to its bottom line, and the impact of price cuts to boost new motor sales.
It is now launching a turnaround plan, which will be outlined in detail alongside interim results in late September.
It said this will focus on improving profitability of its core UK motor and leasing businesses, launch growth plans for its dealer management system and software business Pinewood and overhaul Car Store.
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."
Pendragon saw shares dive in April when it announced a review into operations after it fell to an unexpected loss of £2.8 million in the first quarter.
The performance fell around £10 million short of board expectations, comprised of some £7 million from the impact of falling margins, about £2 million from cost increases and £1 million from the worse-than-expected performance of Car Store, which increased from 26 to 34 sites last year.
Car sales have fallen steadily as nervous consumers hold off on big-ticket purchases, with latest industry figures showing new registrations down 3.1 per cent in the year to May and heavy falls in used car values.
Dealers have reduced prices to drive an increase in sales but have seen margins hammered as a result.