Eagers Automotive shares rally on record profit, dividends
Shares in the nation’s largest auto retailer rally more than 12 per cent following record annual profit and a strong new car order book.
Shares in the nation’s largest auto retailer Eagers Automotive rallied more than 12 per cent after it reported record annual profit and dividend, plus a strong order book driven by demand for new cars outstripping supply.
Eagers said demand for new vehicles continues to outstrip supply as the sector transitioned to a “new normal” under which the industry operates with a sustainable order bank as its written orders for new cars grows, although at a slightly slowing pace.
The company on Thursday reported record underlying operating profit before tax of $405.2m for the 12 months to December 31 from $401.8m a year earlier, but revenue slipped 1.4 per cent to $8.54bn.
Eagers will pay a record final dividend of 49c a share, up from 42.5c, payable on March 16. The total ordinary dividend was a record 71c a share, up 13.6 per cent on 2021.
The strong financial performance sent the group’s shares up more than 12.7 per cent to $13.44. The stock later closed up $1.07 to $13.
The car retailer said the record financial performance was underpinned by continued strong demand for new and pre-owned cars, sustainable strong return on sales through a reset cost base and ongoing focus on technology enabled productivity improvements.
The successful acquisition and integration of the ACT and South Australia multi-franchised dealership groups also bolstered earnings. The 2022 result included significant items of $37m net income before tax, predominantly relating to the gain on sale of Bill Buckle Auto Group.
Demand for new and used vehicles strengthened on 2021 levels, with new vehicle market demand continuing to materially outstrip deliveries, leading to further order book growth providing a strong foundation into 2023 and beyond, it said. The total new car order book grew by 74.4 per cent since December 2021.
It ended the year with a property portfolio worth $607.6m, up from $448.3m as at the end of 2021.
Eagers chief executive Keith Thornton said the company’s record full year underlying profit reflected the strength of ongoing market dynamics combined with its reset and more productive operating platform.
“Our record dividend underlines the confidence the board has in our outlook for 2023 and beyond.
“The industry is at an inflection point and Eagers Automotive is uniquely positioned to capitalise on its scale and expertise while leading the generational shift towards a lower emission future.”
Eagers’ annual net profit fell 6.4 per cent to $324.3m.
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