Getting with the strength suits AP Eagers

Shares in rival Automotive Holdings Group sees bottom line swell

Getting with the strength suits AP Eagers
Martin Ward will focus on truck sales performance.


Like competitor Automotive Holdings Group (AHG), AP Eagers has refused to let poor truck sales spoil a slew of records on nearly every line.

Adding to the good cheer was the vehicle vendor shareholdings in its rival, which, along with the sale of investments and property, helped it realise a record statutory profit after tax of $87 million compared with the previous first half of $76.7 million.

The strategic 19.9 per cent shareholding in AHG as of December 31 was valued at $275.3 million based on its closing share price of $4.52.

Whilst not included in the company’s statutory profit after tax, it did record a before tax unrealised $43.2 million gain from it.

Whispers that AP Eagers may drop trucks are likely to get louder as the National Truck Division recorded a poor result providing a loss of $3.2 million including the goodwill impairment write-down of $5.5 million in 2015 compared to $3.5 million profit in 2014.

"Challenging new and used heavy truck trading conditions resulted in a decrease in revenue of 7.8%," CEO Martin Ward reports.

The group even saw a property valuation decrease of $2.1 million for its Milperra truck site.

But divestment talk seems tempered somewhat, given its $114 million November purchase of Birrrell Group dealerships.

These included "12 car and truck brands across a number of locations in Tasmania and the eastern suburbs of Melbourne. Notably, they include the state wide representation for Holden, HSV, Hyundai, Citroen, Isuzu Trucks, Volvo Trucks, Mack Trucks and UD Trucks in Tasmania", it said at the time.

It also seemed happy in January to pick up for $30 million the Crampton Automotive Group, which includes Port City Autos, north of Brisbane, with its Isuzu trucks component.

It will be noted the last key focus area on Ward’s list for the coming year is: "A turnaround in the performance of our truck business."

On the logistics and warehousing side, though, the view was at a stark difference.

"The relocation and consolidation of the Eagers Parts Distribution Centre from Newstead to Eagle Farm, Queensland, in conjunction with a significant investment in state of the art warehousing and logistics systems, supported a full year record parts result," the group says.

"Improved market share, revenue growth and cost savings, while delivering a better service to our Dealer and Trade customers, should be further enhanced with the planned move of our Metro Ford Parts Distribution Centre into the Eagle Farm facility by early 2017.

"This warehouse facility will support the majority of franchises represented in South East Queensland in the single, largest and most efficient parts distribution centre for OEM vehicle parts in Queensland."                   

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