AHG half-year profit swells

AUSTRALIA’S biggest vehicle retailer, Automotive Holdings Group, has set a record half-year profit on the back of strengthening retail sales.

It posted a net profit for the second half of the year to December 31, 2014 of $45 million, up 17.4 per cent on the previous corresponding period, on revenue of $2.57 billion, which was up 10.6 per cent on the previous period.

Importantly, AHG’s result shows a healthy national vehicle market and confirms its decision to spread retail ownership throughout Australia’s prime markets.

In announcing the results, AHG managing director Bronte Howson said he was “very confident’’ about earnings for the remainder of the year.

Within AHG’s diverse business portfolio, its automotive division reaped the major rewards. Revenue for this division was up 7.1 per cent to $2.05 billion.

The return was trimmed by a softening of some markets and attributed to the downturn in the mining industry, but buoyed by strong private-buyer sales and the contribution made by AHG’s purchase of the Bradstreet Motor Group of Newcastle.

It also opened new dealerships at Melbourne City Hyundai, Castle Hill Nissan (NSW) and Manukau Nissan (NZ), and redeveloped the Davie Motors Holden (NZ) site.

Mr Howson said: “The Automotive division has outperformed the broader market despite the significant downturn in new-vehicle registrations caused by reduced activity in the mining and resources sectors in Western Australia, Queensland and NSW’’.

“The Group benefitted from strong performances in its established automotive dealerships while successfully integrating the Bradstreet acquisition and developing additional Greenfield sites, all of which provide significant future upside.’’Mr Howson said the investment in the redevelopment and restructuring of dealerships was part of the Group’s sustainable growth strategy.

AHG’s Refrigerated Logistics division also reported a record with its six-monthly revenue up 51.9 per cent at $319.1 million, partially reflecting the purchase of the Scott’s and JAT businesses.

The Group’s “other logistics’’ division recorded a minor one per cent gain on the previous corresponding period with revenue of $195.7 million.

This division includes parts company AMCAP and Covs and the importation of KTM motorcycles. Revenue from imports was affected by currency fluctuations.

Mr Howson said AHG would look forward to realising the synergies of Bradstreet, Scott’s and JAT and continue to assess growth opportunities.

“The industry forecast for calendar year 2015 is 1.14 million new vehicle sales in Australia and AHG is confident of maintaining its share of the market,” he said.

“The comparatively low fuel price and interest rates are expected to boost confidence in the automotive sector in the second half of the financial year.

“I am very confident going forward. AHG has a strong balance sheet, an experienced and motivated management team and proven business models across its divisions.”

Shareholders will receive an interim dividend of 9 cents per share fully franked.