Motor Trade Finance braces for auto industry disruption with brand refresh; earnings fall
By Sophie Boot
Nov. 20 (BusinessDesk) - Motor Trade Finance's underlying annual earnings dropped 7.6 percent, despite increasing both sales and its market share, and the lender says it's adapting its brand to face upcoming change in the vehicle market.
Net profit rose to $7.5 million in the year ended Sept. 30, from $7.2 million a year earlier, but underlying profit after tax, which removes the volatility of unrealised fair value movements, fell to $7.3 million from $7.9 million in 2016.
Sales jumped 36 percent to $567.4 million, which the company said was due to a "very buoyant year" in the industry along with initiatives such as its release of a non-recourse lending option. It announced the non-recourse lending partnership with Turners Automotive Group last November. The offering allows MTF franchisees and dealers to sell vehicles to people with higher credit risk. A pilot was launched in early December with a progressive roll out from January.
The company said its market share - as measured by the government's Personal Property Securities Register registrations - rose to 13.6 percent in the year from 11.6 percent in the prior period, and non-recourse lending contributed $58.6 million in sales in the year. Non-recourse receivables are not included on the company's balance sheet as they are funded by Turners, but the company included them in its sales and market share figures because they are generated through its business channel, it said.
Assets under management rose to $721 million in the year, from $596.6 million a year earlier.
MTF will drop references to vehicles in its branding "to reflect and encourage broader asset lending," it said. The vehicle industry is changing with the advent of car-sharing, autonomous vehicles and new technologies, and digitisation is expected to drive changes in financial services, it said.
"The worldwide speculation surrounding disruption in the areas where we operate, being the automotive and financial markets, has intensified over the past year," the company said. "What we do know is that our markets are set for change, and while the extent and pace of this change remains unclear, we know we must position ourselves to adapt early and not wait to react. The board and management are confident that because we are agile, adaptive and put the customer at the centre of everything we do, we can look for new opportunities to support sustainable growth and profitability."
The board declared a 7.37 cent dividend, payable on Nov. 30. That brings the annual payout to 13.37 cents per share, down from 13.96 cents per share in 2016.