Eastern delivers on its promise with sales soaring above £300m
EASTERN Holdings, one of Scotland’s biggest car dealerships, selling luxury marques such as Lexus and Mercedes, has seen full-year sales drive through the £300 million mark after taking on further franchises.
Newly-filed accounts also show that the Edinburgh-based company, which can trace its roots back to the 1920s, increased its headcount by almost 70 to 916 staff.
It follows a string of franchises that were taken on in late 2010, including Lexus in Glasgow and Honda and Mazda in Edinburgh.
However, the company’s directors stressed that they did not see any “significant” profits flowing from the additions for up to two years while they built up their after-sales business.
Start-up costs linked to the extra dealerships ate into earnings during the year, with profits at a pre-tax level falling to just below £3.3m from £5.1m in 2010.
The group also had to contend with a “massive” decline in turnover and profit contribution from its Saab showrooms following the collapse of the Swedish brand. It has since refranchised two of the outlets, with Volkswagen-owned Seat, and is in talks regarding the others. The sites will remain as Saab authorised repairers.
The Companies House documents reveal that overall turnover during the year to 31 December grew by more than 12 per cent to £324.4m. Gross profit rose by 6.2 per cent to £39.4m.
Writing in the accounts, Eastern’s bosses said: “The directors are pleased with the increase in turnover and gross profit, which has come from our existing franchises and also the new franchises that were incorporated into the group in late 2010.
“Our administrative expenses increased by 10 per cent because of the significant start-up costs associated with incorporating these four new franchises and facilities into the group.”
Eastern was founded by John Brown, an insurance broker and accountant, and was run for many years from showrooms on Edinburgh’s George Street.
Earlier this year, the group opened a 25,000sq ft Toyota dealership at its flagship site – Edinburgh’s “luxury car village” on the western fringes of the capital.
According to the accounts, the firm paid an interim dividend of £800,000, slightly down on the £809,000 from a year earlier. As in 2010, no final dividend was proposed.
Figures last week showed there was continued growth in new car sales north of the Border. The Scottish Motor Trade Association (SMTA) said a total of 16,694 cars were registered last month, a 9.3 per cent hike over June 2011. That compared with a rise of 3.5 per cent for the UK as a whole.
SMTA chief executive Douglas Robertson said that the number of private buyers had risen almost 10 per cent over the past six months.
Four of the car brands sold by Eastern – Honda, Mini, Nissan and Toyota – have UK manufacturing operations, which are all set to benefit from recent investment announcements.
On Monday, BMW-owned Mini said it was pumping a further £250m into its British plants.
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