- Pendragon shares rally by 15 per cent during morning trading
- This was despite Pendragon’s underlying profits falling by 20%
- Company expects to double revenue from used car market by 2021
Car dealer Pendragon’s shares rallied by 15 per cent during morning trading, despite the company experiencing a slump in full year profits of 20 per cent. City investors responded positively to the company confirming that its new strategy will focus on the sale of used cars.
Although underlying pre-tax profits fell to £60.4 million in 2017, Pendragon’s total revenue was up 4.5 per cent to £4.7 billion, driven by used car sales, which rose by 15.3 per cent on a like for like basis.
Pendragon boss Trevor Finn predicts revenue from the used market will double by 2021
As of mid morning, Pendragon’s shares were up by 15 per cent 24p.
Pendragon boss Trevor Finn discussing the segment of the market, where it trades as Evans Halshaw, said: ‘The group has a clear focus and direction to transform the business and double used revenue by 2021.
‘This will be enabled by our market leading software business to provide the online and technology platform and by investment in increasing the used retail and after sales representation points in the UK. We anticipate our performance in 2018 to be in line with expectations.’
AJ Bell investment director Russ Mould commenting on the car dealership’s share price said: ‘A share price hike in response to weak 2017 results from car dealership Pendragon can be attributed to investor relief that life hasn’t got worse for the company, given a difficult market backdrop for the car seller.’
The UK’s leading online vehicle retailer pointed to a ‘challenging economic environment and lower consumer confidence’, for the lack-lustre underlying pre-tax profits.
Pendragon’s underlying profits before tax fell by £15.0m, due to reduction in new revenue in the year and the margin impacts in the third quarter.
In December Pendragon said it will shut dealerships in Britain and offload its US division following a profit warning in October.
The results come as the Society of Motor Manufacturers and Traders (SMMT) continues to reel off dire monthly figures showing that Britain’s new car market is going in reverse.
Earlier this month, the SMMT revealed that just over 163,600 cars were driven off forecourts in January, down by 6.3 per cent compared with the same month in 2017.
Within that, there was a 30 per cent drop in business buyers.
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