Turners Auction FY profit triples as costs fall

Turners Auction FY profit triples as fewer Japanese imports slash costs

By Paul McBeth

Feb. 19 (BusinessWire) – Turners Auctions Ltd., the largest single seller of motor vehicles in New Zealand, tripled its full-year profit after reducing purchases of used vehicles in Japan, allowing costs to fall more than revenue.

The shares jumped 8% to $1.35 after Turners said net income rose to $3.3 million, or 12 cents a share, in calendar 2009, from $1.1 million, or 3.9 cents, a year earlier. That’s the top end of the range given by Turners in its August guidance statement.

The company slashed total expenses 14% to $65.8 million, with the bulk of that coming from tighter spending controls on imports through its Turners Fleet unit which were down 25% to $24.7 million.

“Markets are down hugely – in a normal year a million cars change hands” and last year only 800,000 used units were sold, chief executive Graham Roberts told BusinessWire. Still, the company tightened its controls on imports from Japan, which contributed greatly to its better figures, he said.

Turners’ revenue shrank 9.5% to $70.4 million, though most of that came from the cut back on Japanese imports. Excluding the Turners Fleet unit, revenue gained 0.4% to $41.4 million.

Roberts said car prices are between 10% and 20% higher than where they were at this time last year due to “a shortage of cars” with fewer imports coming into the country.

“New cars are down about 26% as people are hanging on to them, causing fewer trade-ins, and company vehicles are getting extended leases as well,” he said.

He’s reasonably happy with how the company’s placed this year, with sales on its Turners Live internet platform accounting for about a quarter of all sales providing an avenue for growth. The shift to online advertising reduced marketing costs by 51% to $1.4 million and boosted the number of registered bidders.

The growing number of receiverships will also underpin gains for the company this year, with its non-auto related auctions accounting for about 10% of revenue, Roberts said.

Turners will pay a fully imputed dividend of 7 cents a share in the second half of the year, taking total payments to 12 cents.

(BusinessWire)