Automotive Holdings reaps record result
BY BARRY PARK | 19th Aug 2014
The large publicly Perth-based company, which also operates a transport and logistics division, said the automotive business made a significant contribution to the record result, performing strongly despite a “slowdown in automotive retailing caused by reduced activity in the mining and resources sectors in Western Australia”.
AHG managing director Bronte Howson said: “Once again we’ve benefitted from strong performances from our established automotive dealerships while successfully integrating acquisitions and developing additional greenfield sites, all of which provide significant future upside.” According to the company’s results filed with the Australian Stock Exchange, revenue from the automotive retail division rose 9.7 per cent to $3.883 billion, while pre-tax operating margins improved to 3.4 per cent to deliver pre-tax operating earnings of $132.5 million – a jump of 13.6 per cent over the previous financial year.
According to Mr Howson, AHG had “clearly outperformed” the broader market.
“While the Australian new-car market slowed during FY2014, AHG recorded increased sales with strong performances in used vehicles, finance, insurance, service and parts,” he said.
“These multiple revenue streams and efficiencies of scale underpin our operating model.” AHG said its sales strength was “primarily” in the more lucrative private sector rather than fleets and government.
AHG bought Western Australia-based dealership Jason Mazda, as well as New Zealand-based Davie Motors during the financial year, with each making an “especially pleasing” contribution to the company’s bottom line.
“The group continues to focus on consolidating its acquisitions and greenfield investments in the knowledge that, under our operating model, the dealerships will provide sustained strong contributions to AHG’s future performance,” Mr Howson said.
AHG said it also expected to complete the acquisition of the Newcastle-based Bradstreet Group this week, adding 13 franchises and seven dealership locations.
The report notes that AHG made strong revenue and profit growth “through successful integration of new acquisitions ... aided by growing success of marketing campaigns”.
It said it increased new vehicle sales were complemented by multiple revenue streams of strong used vehicle sales, finance and insurance, service and parts.
It also plans to start selling cars via greenfield sites including Castle Hill Nissan in NSW and Manukau Nissan in New Zealand, and counted the opening of Melbourne City Holden/HSV as one of its highlights for the year.
According to the report, AHG is sitting on $218 million in cash and borrowings, with plans for “continued investment in strategic and accretive acquisitions that complement existing portfolios”.
The company expects the acquisitions of transport and logistics specialists Scott’s and JAT, and the Bradstreet dealership group, to add about $600 million to the group’s revenue over the 2014-15 financial year.
The company has also added the distribution of Swedish motorcycle brand Husqvarna to its fold, alongside the previously managed Austrian two-wheel brand KTM.
“We excited to have the Husqvarna product range and we look forward to Husqvarna contributing strongly to our business,” Mr Howson said.
AHG now employs more than 6800 people in Australia and New Zealand.
The company’s strong result comes despite flat motor vehicle sales in the Australian market over the first seven months of this year.
Brands sold by AHG include French brands Citroen and Peugeot, Ford and Holden, German premium brand Volkswagen, Korean brands Hyundai and Kia and Japanese brands Mazda, Mitsubishi, Nissan, Subaru, Suzuki and Toyota.
