Turners Auctions lifts first-half profit 12% despite "challenging" used car business
Aug. 18 (BusinessDesk) - Vehicle auctioneer Turners Auctions lifted first-half profit 12% despite sales falling 3% with the used car business remaining “challenging.” The shares jumped 8.7%.
Net profit for the six months ended June 30 rose to $1.6 million while sales fell to $34.9 million due to a 9% reduction in sales of used Japanese imports by the Turners Fleet division. The company said $17.8 million of auction revenue was consistent with the same six months last year.
“Trading has improved in the second quarter,
largely due to good performance in our commercial and trucks
business,” Turners said.
“With reduced availability of imports from Japan and diminished demand from the public in the current economic environment, the used car business remains challenging,” it said.
The Turners Finance ledger was up 12% to $19.3 million from June 2010. “The growing ledger and strong add-on sales of insurance products have resulted in continued growth in operating profit from this business,” the company said.
Chief executive Graham Roberts told Business Desk the finance book “is running extremely well. Current arrears are down below 1%.”
In Japan, car manufacturers are gearing up production again which should soon result in more used cars becoming available but new emissions standards coming in effect on January 1, 2012 will mean only about half the Japanese cars imported this year would be able to come in next year, Roberts said.
The performance of the trucks business is repaying investment the company made about 18 months ago and the strength of the commercial business, while a positive story for Turners, reflects the large number of receiverships around the country.
“It's good to have a counter-cyclical business,” Roberts said.
Turners will pay a fully imputed 5 cents a share first-half dividend, the same as last year's payout, but will also pay a 6 cents fully imputed special dividend, a total of $3 million.
Its balance sheet carries no debt other than the funding for its finance ledger, $19.6 million at June 30, which is provided by Motor Trade Finance. It also had $14.4 million in cash at June 30.
“We're working quite hard currently on a number of investment opportunities” but the directors still fell there was sufficient cash to warrant a special dividend, Roberts said.
Turners' shares rose 12 cents to $1.50.