Britain’s largest car dealer has vowed to resume dividend payments for the first time since 2008 after unveiling an 18 per cent rise in annual profits.
Pendragon, which operates under the Evans Halshaw and Stratstone brands, also said it expects new and used car markets to continue to grow this year, following a 5 per cent increase in revenues to £3.6 billion in the year to the end of December.
The group runs 240 dealerships across the UK, along with 14 used car sites and a small operation in southern California, where it sells premium marques Aston Martin, Jaguar and Land Rover across eight locations.
Underlying pre-tax profits grew to £36.4 million, up from £30.8m in 2011, boosted by a 2.8 per cent rise in revenues to £1.9bn at its Evans Halshaw division, which supplies “volume” brands including Ford, Nissan, Renault and Vauxhall.
Revenues at its upmarket Stratstone dealerships, which sell the likes of BMW, Ferrari, Mercedes-Benz and Porsche luxury motors, grew 7.9 per cent to £1.4bn.
The group expanded its prestige offering last year with the purchase of Morgan dealerships in Edinburgh and Stourbridge, and chief executive Trevor Finn told The Scotsman that the
acquisition was a good fit for its Stratstone brand, as many
Morgan drivers were likely to have a second “day-to-day” car.
Finn said Pendragon had “performed strongly in a recovering vehicle market” and the board proposed a final dividend of 0.1p per share, to be paid after its annual meeting in May, which highlighted the firm’s confidence in the UK car market.
He added: “The retail market in January was up 15.9 per cent, which is not insignificant as January is the third largest month of the year for sales.”
Earlier this month, the Society of Motor Manufacturers & Traders raised its forecasts for the new car market following a better-than-expected performance during 2012, which saw sales break through the two million barrier to hit the highest level since 2008.
The trade body expects sales to grow by 0.6 per cent this year, before accelerating by 2.6 per cent in 2014, when registrations are predicted to top 2.1 million.
In contrast, the Association of European Automakers said that new car registrations fell 8.5 per cent to 918,280 last month, the slowest January since its records began in 1990, as austerity measures and unemployment hit consumer spending.
Espirito Santo analyst Sanjay Vidyarthi said: “We think that the UK is likely to remain one of the few markets in Europe to see new car volume growth in 2013.”
Finn said customers were increasingly turning to the internet before buying a car, and visitor numbers across the firm’s websites had grown by 87 per cent over the past three years.
Pendragon ended the year with a net debt pile of £216.4m, down by £30.4m over the year.