MotorCycle Holding shares slump 25pc on earnings downgrade
MotorCycle Holdings CEO David Ahmet lost $7.5m from the value of his shares after the Brisbane-based firm revealed first-half underlying earnings could slump 20 per cent.
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MotorCycle Holdings shares hit the skids after the company revealed first-half underlying earnings could fall by more than 20 per cent.
The company, Australasia’s largest motorcycle retailer and distributor, told the market on Thursday it expected to report underlying earnings before interest, tax, depreciation and amortisation (EBITDA) of between $14m and $16m for the six months to December 31, subject to auditing.
That would be down 11.6 per cent to 22.7 per cent on the $18.1m result it notched for the same period a year ago.
MotorCycle Holdings shares tumbled 24.7 per cent to $1.89, wiping almost $46m from the Brisbane-based company’s market value. The share rout stripped $7.5m from the value of CEO and major shareholder David Ahmet’s 12 million shares.
“While retail unit sales of new motorcycles remain strong, wider economic conditions are driving margin pressures affecting all areas of the business,” said the company, which operates dealerships for a range of brands including Harley-Davidson, Morgan & Wacker Motorcycles and TeamMoto.
The company completed the acquisition of Mojo Group in 2022, which increased its exposure to the scooter, ATV and electric motorcycle segments.
MotorCycle Holdings told the market wholesale sales of farm vehicles (ATVs and side by sides) are slowing amid increased competition as stock levels for all distributors normalised.
“The competitive environment is putting pressure on margins,” the company said.
At the company’s annual general meeting last month, Mr Ahmet told shareholders MotorCycle Holdings had significantly outperformed the industry with just a 2 per cent decline in new motorcycle retail unit sales in the 2023 financial year.
“The group showed the ongoing strength of its business model, increasing its new bike market share from approximately 12 per cent in FY22 to 14 per cent in FY23,” he said, noting the company had produced a $23m statutory net profit and $55.3m in underlying EBIT for the period.
He said conditions were expected to remain challenging for the remainder of the financial year, with interest rates and cost-of-living pressures expected to continue to impact trading.
The company had a boom time during pandemic with net profit soaring 86 per cent to $28.3m in the 2021 financial year.
Mr Ahmet said at the time, because of Covid, customers were not spending money on overseas trips or going out to dinner and were looking for something to do on the weekends — so they were buying motorcycles.
Mr Ahmet, a trained mechanic, started working for MotorCycle Holdings as a salesman when he was in his twenties and it was a fledgling motorcycle dealership in the Brisbane suburb of Moorooka. He showed natural talent in the business and within six months was part owner.
The company listed on the ASX in 2016 and shares traded as high as $5.27 in 2017.
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