Tough conditions in the car repair market have prompted a profit warning from the industry’s largest player, sending its shares sharply lower.
Nationwide Accident Repair Services, which employs more than 2,100 people across 63 sites in the UK, said its annual profits were expected to fall short of City forecasts as margins come under pressure from “ongoing stresses” across the sector.
In a trading update, the firm predicted revenues of about £79 million for the first half, in line with last year’s interim results, but it predicted pre-tax profits of about £1.4m – well short of the £2.1m it reported for the first six months of 2012. Shares closed down 10.5p, or 15.6 per cent, at 56.5p.
Nationwide also said it would be reviewing its dividend policy, although it pledged to declare a payout when its half-year figures are published on 25 September. Investors received an interim dividend of 1.9p last year.
The group said: “The board is extremely aware of the importance of the dividend to shareholders and will consider an appropriate dividend policy based on a payout ratio which reflects this importance, whilst allowing the group to exploit growth opportunities.”
Nationwide recently bought a vehicle repair chain in the south-west of England and said the acquisition would boost annual sales by about £6m.