Eagers Automotive profits race ahead
Eagers Automotive shares received a boost on Friday after a positive quarterly trading update impressed investors. The company expects to record an underlying operating profit before tax from continuing operations for the three months ended 31 March 2021 of approximately $98 million. On a statutory basis, that figure is expected to jump to $105 million.
Unusually strong market dynamics, characterised by demand outstripping supply, combined with the ongoing benefits of the company’s material cost out program completed over the last 12 months, have underpinned the result.
The diverse automotive retail group has over 250 locations throughout Australia and New Zealand representing almost 30 car brands and 10 truck and bus brands. Their dealership locations service over 1 million vehicles across Australia and New Zealand per year providing full facilities including the sale of new and used vehicles, service, parts, aftercare and the facilitation of allied consumer finance. Eagers operations are typically provided through strategically clustered dealerships, many of which are situated on properties owned by them, in a portfolio of over $300 million of prime real estate positioned in high profile locations across Australia.
Eagers remains focused on balancing the risk of changing market dynamics with the continued execution of its Next 100 strategy and disciplined cost base management.
Furthermore, Eagers Automotive revealed that the solid result does not include the sale of the Daimler Truck operations and Milperra property. The transaction, valued at $108 million, is expected to settle sometime in the first half of 2021 and will represent a key step in the simplification of Eager’s retail business, delivering an estimated net gain before tax of $32 - $36 million.
Eagers shares have maintained a steady climb over the last 12 months, providing investors with gains of more than 300%.