Eagers Auto will miss its profit forecasts due to a slowdown in car deliveries to customers

A shortage of semiconductors, the Ukraine war and China lockdowns has slowed delivery times for new cars and dented profit for Eagers Automotive.

Eagers Automotive, led by Keith Thornton, has issued a profit warning, hurt by a semiconductor shortage, the Ukraine war and lockdowns in China. Picture: David Clark/AAP

In further evidence havoc across global supply chains is constraining the delivery of new vehicles to Australian drivers, the nation’s largest car yard owner Eagers Automotive has issued a profit warning.

The company warned shareholders at its annual meeting that interim profit will be down as much as 15 per cent from its target.

Poor supplies of semiconductors, which emerged early in the Covid-19 pandemic as a major bugbear for car makers and retailers, has persisted and stung Eagers as it scrambles to get access to new cars for its growing list of customers who are waiting months for delivery.

The war in Ukraine as well as lockdowns in China have also been included in a shopping list by Eagers – which has around 11 per cent of the car sales market – of problems that are getting between drivers and their new cars.

Eagers chief executive Keith Thornton said while demand for new cars was strong and its order book for new cars was up 25 per cent since Christmas but it would not be able to get its cars in the numbers it hoped to customers and this would dent its interim earnings.

Eagers expects to record an underlying operating profit before tax from continuing operations for the six months ending June 30 in the range of $183m to $189m, as compared to $214.8m for the prior corresponding period on a like for like basis.

On a statutory basis, interim profit before tax from continuing operations is expected to be in the range of $225m to $240m, down from $267.4m last year.

Shares in Eagers fell 2.8 per cent to $11.58 early Wednesday morning.

Eagers chief executive Keith Thornton blamed global supply chain issues for the profit warning.

“Despite the continuing strength of our underlying business, positive operational metrics and record order book, an anticipated reduction in the number of new vehicles delivered to customers in the first half of 2022 is expected to impact our half year financial performance,” he said on Wednesday.

“This is due to the supply of new vehicles being impacted by multiple global events, largely attributable to the ongoing effects of semiconductor shortages in the industry and compounded by the both the Ukraine conflict and China’s ongoing Covid lockdowns.”

For the 12 months to the end of December, Eagers reported a net profit of $456.8m and consolidated revenue from continuing operations of $8.7bn, marginally down on the prior period due to the divestment of its Daimler Trucks business in April 2021.

In 2019, Eagers Automotive, then known as AP Eagers, cemented its position as the country’s biggest car dealer through the purchase of rival and ASX-listed AHG for $2bn.

It was forced to rely on wage subsidies from the Australian and New Zealand governments including $130m in JobKeeper. Around 75 per cent of its more than 8200 workers were put on the local JobKeeper scheme to save thousands of jobs during the worst months of the pandemic.