AP Eagers sales and operational boost revs up profit outlook

AUTO retailer AP Eagers’ shares climbed almost 7 per cent after the 105-year-old company gave an upbeat profit forecast in the face of increasing industry headwinds.

AP Eagers CEO Martin Ward at his car dealership in Fortitude Valley. Picture: Glenn Hunt

AUTO retailer AP Eagers’ shares climbed more than 7 per cent after the 105-year-old company gave an upbeat profit forecast in the face of increasing industry headwinds.

The Brisbane-based company said it expected annual profit to increase three per cent to $101.2 million in the 12 months to the end of December 31. The shares, which have slumped almost 20 per cent in the last year, climbed 7.28 per cent to $6.63 yesterday.

AP Eagers managing director Martin Ward said the improved result had been delivered by stronger operating profit at both its car and truck businesses.

“Both businesses achieved record operating results for December, with the truck business achieving a record operating net profit before tax for the 2018 financial year,” said Mr Ward.

“This is a very strong full year operational result for the group considering the widely reported challenges within automotive retailing during 2018.”

CommSec has warned the softening of home prices has made people more reluctant to buy big ticket items like cars, and car sales have eased from recent highs.

The auto retailing industry also is facing rising disruption in the form of electric cars, autonomous vehicles and ride-sharing apps. AP Eagers’ suffered a 5 per cent drop in profit in 2017 amid tightening margins across the auto industry.

Mr Ward said that the company was preparing for those changes, which would likely see the “big glass box” showrooms being replaced by smaller showrooms located in satellite locations such as shopping centres.

AP Eagers already has outlets in some shopping centres and is building a new retail hub as part of the $300 million Auto Mall precinct at Brisbane Airport.

Mr Ward said the strong operational result offset the previously flagged reduced gains from the sale of non-core operations and property.

AP Eagers will release its final results in February.