Eagers Automotive shares hammered on first-half profit warning
Shares in Eagers Automotive have been hammered after the new car giant warned high interest rates, the cost-of-living crunch and a rise in business expenses will put the brakes on profits for the first half of the financial year.
Australia’s largest car retailer told investors at it annual general meeting on Wednesday it was not immune from the economic malaise, including inflation, the Reserve Bank’s cycle of 13 interest rate increases since mid-2022 and cost of living pressures that had impacted consumer spending.
“We also continue to deal with Government’s zero emissions policies which have implications for many businesses across many industries,” warned chair Tim Crommelin.
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By continuing you agree to our Terms and Privacy Policy.Figures released by the Federal Chamber of Automotive Industries earlier this month showed that while new vehicle sales in April may not have topped the 105,000-plus zenith reached in February and March, it was still a record month — up 18.3 per from a year earlier — and helped the nation’s dealers achieve the highest-ever year-to-date sales result.
But Eagers — which bought out WA’s Automotive Holdings Group five years ago — said there were pockets of market weakness in Sydney and Newcastle, and the New Zealand market remained soft, falling a further 10.4 per cent.
Its shares were down 16 per cent to $10.26 at 9.15am.
In a year-to-date trading update, chief executive Keith Thornton said cost-of-living pressures were moderating consumer spending while inflation was driving up the cost of doing business just as the new vehicle market faced a competition squeeze as pandemic supply bottlenecks subsided.
“These external factors have combined with some short-term internal business challenges in the first half of 2024,” Mr Thorton said.
“Given the current market and business dynamics, and with a cautious lens on consumer sentiment, we expect to achieve an underlying trading performance for the first half of 2024 that is approximately 85 per cent of the underlying profit before tax for the first half of 2023.”
Eagers delivered an underlying operating profit before tax of $207.4 million in the first half of last year.
It is targeting another year of more than $1 billion of growth to more than $11b, with revenue already up 18.3 per cent in the four months to the end of April.
