Car dealership Pendragon reports higher costs and supply chain issues following war in Ukraine – but profits hit record high of £83m
- Record underlying pre-profit of £83m up 912.2% year-on-year
- Meanwhile, he managed to reduce his net debt from £50.7m to £49.7m.
- This included the £28.9m VAT refund deferred from 2020
British car retailer Pendragon reported record annual profits thanks to strong demand for used vehicles.
However, the London-listed company has warned that the Russian-Ukrainian conflict could disrupt new vehicle supply chains and drive up costs.
The Nottingham-based company revealed record pre-tax underlying profit of £83m, up 912.2% on the previous year.
UK car retailer Pendragon reported record annual profit on strong demand for used vehicles
During this time, he managed to reduce his net debt from £50.7m to £49.7m, including the repayment of £28.9m of deferred VAT from 2020.
Pendragon attributed much of its success to its “digital capabilities” during the pandemic, which enabled it to “meet demand through a combination of full in-store experiences, home delivery options and click and collect”.
Other factors that have contributed to Pendragon’s profitability include the restructuring of its cost base and store base during the latter part of 2020.
Looking ahead, Pendragon says it expects new and used car margins to decline during 2022 from “extraordinary levels reached in 2021.”
He also predicts that new cars will remain scarce in 2022, while higher labor and utility costs are another consideration, along with the fallout from the Russia-Ukraine conflict.
In terms of shortages, like other UK dealers Inchcape and Lookers, the company is struggling with a limited supply of semiconductors, which has disrupted vehicle deliveries around the world.
Commenting on the full year results, Pendragon CEO Bill Berman said, “We delivered a really strong set of results, with positive contributions from all parts of our business.
“At the end of 2020, we defined our new strategy to transform our operations and adapt to the rapidly changing retail environment. Since then, we have focused on creating value through the implementation of this strategy and today we are seeing the operational and financial benefits of this hard work in our results.
“Our industry experienced a unique set of trading conditions during the period and I am pleased with how we performed in this environment.
“We made the most of favorable market momentum to generate record underlying earnings and also reported a return to earnings for CarStore, our relaunched used car brand.”
Berman added that despite some of the hurdles, the company has “the right strategy in place and we expect to make positive progress towards our long-term goals this year.”
Founded in 1989 as a spin-off from Williams PLC, Pendragon has grown to represent 21 different automakers in the retail industry.
It now has over 160 locations across the UK under the Evans Halshaw, Stratstone and CarStore brands, offering new and used vehicles as well as aftercare services.
Pendragon is not currently proposing a final dividend for 2021.