Pendragon PLC (LON:PDG) shares jumped over 11% higher today as it highlighted improving trends although it reported a 20% drop in underlying 2017 profit, in line with a profit warning last year amid waning consumer confidence on uncertainty over the UK government's diesel policy and Brexit.
The FTSE All Share listed firm - which trades under the names Stratstone, Evans Halshaw and Quicks across Britain – posted an underlying pre-tax profit of £60.4mln for full-year 2017, down from £75.4mln a year earlier, despite underlying revenues rising by 4.5% to £4.739bn.
The car dealership chain flagged up more difficult trading conditions in the third quarter, but said it experienced a recovery in the fourth quarter, helped by an improvement in used vehicle sales.
The firm added that it expects to make progress in 2018 on its strategic objectives and anticipates its performance in 2018 to be in line with expectations.
Last year Pendragon said it would sell its US division and focus on growing its domestic operations with the use of new technology.
Pendragon’s chief executive, Trevor Finn 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 aftersales representation points in the UK.”
The firm increased its full year dividends by 6.89% to 1.55p per share, up from 1.45p last year.
Shares drive higher
In early morning trading, Pendragon shares were up nearly 11.5%, or 2.4p at 23.3p.
In a note to clients, analysts at Liberum Capital reiterated a 'hold' rating and 26p target price on Pendragon shares, noting that the results were in line with their expectations which had been lowered by 19% after October's profit warning.
They added: “The outlook statement highlights that the new car market is expected to remain in decline (2018: -6%, 2019 -2%), while growth is expected in the used market (2018: +1%) and aftersales.
“There is no change to profit expectations with management comfortable with the current market range of (Bloomberg) £60.8m-£70.0m. We do not expect any material change to consensus today.”
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