Arnold Clark seeks takeovers after record sales

Arnold Clark is to continue down the acquisition trail after a string of takeovers last year helped it generate record sales of almost £2.5 billion.

Sir Arnold Clark remains chairman and chief executive of the eponymous company. Picture: Julie Bull

The eponymous motor dealership, founded in the 1950s by Sir Arnold Clark, who remains chairman and chief executive, warned of an “uncertain” economic backdrop but said it expected to grow organically and through “strategic” acquisitions.

Newly-filed accounts show that the Glasgow-based group, which ranks as Scotland’s largest privately-owned company by turnover, banked a pre-tax profit of £60.5 million in 2012, up from £51.8m a year earlier. Turnover rose by 10.3 per cent to £2.48bn.

The firm said acquisition activity had “intensified” in the second half of the year with the biggest deal being the multi-million-pound purchase of 11 showrooms from John R Weir, adding the largest Mercedes-Benz market area in the UK.

Other deals included November’s acquisition of a Vauxhall dealership and bodyshop in Blackpool and a site near Aberdeen, which represents Chevrolet, Chrysler, Jeep and Peugeot.

Across the business, just under 80,000 new cars were sold, a rise of more than 10 per cent, while used car sales totalled 122,398, an increase of 4.6 per cent.

Industry body the Society of Motor Manufacturers & Traders recently forecast new-car sales of 2.22 million in the UK this year – an 8.4 per cent rise on the 2012 total as the market continues to defy the gloom seen elsewhere in Europe.

Clark said: “We have laid down strong foundations for growth and are fully committed to achieving our goal of being the UK’s pre-eminent motor retailer.”

The directors noted in the accounts: “In light of the continuing tough economic conditions, 2013 will see modest growth in the UK motor industry.

“However, the strength of the company and the early trading results mean we can look forward with confidence. The board predicts that turnover will increase in the coming year and expect profitability to remain at levels similar to 2102.”

After the payment of an interim dividend of £2.1m, no final payout will be made. The highest-paid director – assumed to be the firm’s founder – received just under £2.2m in the latest period, up from £1.93m in 2011.

The accounts also revealed that Arnold Clark’s overall headcount rose to 8,315, up 228 on the year before.

Meanwhile, rival motor retailer Eastern Holdings – which sells a range of marques including Lexus, Mercedes and Mini – enjoyed a 6.5 per cent increase in its full-year turnover to £345.5m.

Gross profit was largely flat, according to accounts filed at Companies House, but pre-tax profit fell to £776,000 from almost £3.3m the year before.

The Edinburgh-based company, which can trace its roots back to the 1920s, said costs relating to new franchises had eaten into the bottom line.

Eastern Holdings added that all property funding was in place and additional facilities had been agreed to develop a Volkswagen dealership at its “luxury car village” on the outskirts of Edinburgh.