AP Eagers closing in on AHG reefer sale


Offers for subsidiary’s Refrigerated Logistics arm go to next step

AP Eagers closing in on AHG reefer sale
Martin Ward

 

Costs rises and soft markets are plaguing vehicle sales giant AP Eagers as it gets to grips with digesting rival Automotive Holdings Group (AHG).

The parent company appears to be making progress on a sale AHG was unable to finalise, that of its Refrigerated Logistics division, one of the nation’s largest.

And, despite some trading softness in the vehicles market, AP Eagers insists the integration is "progressing to plan".

"AP Eagers is on track to deliver the full $30 million synergy savings target, comprising an initial $13.5 million (annualised) by 31 December 2019 and the balance within 12 months," the listed company says in a trading update to the market.

"The sale process for AHG’s Refrigerated Logistics business has entered the due diligence stage following the submission of indicative bids."

AP Eagers’ underlying operating profit before tax – a figure complicated by the AHG purchase – for the 10 months ended October 31 is down 6 per cent.

"External trading conditions in the national automotive retail sector remain challenging with the overall market for new vehicle sales in decline for 19 consecutive months, representing a decrease of 126,000 units sold over the same period," AP Eagers says.

"For the 10 months ended 31 October 2019, national new vehicle sales are down 8 per cent on the prior corresponding period (pcp)."

Gains on the sale of non-core operations and property during the period as well as one-off costs related to the merger have been excluded and will be detailed in the company’s year-end accounts.


Read how Refrigerated Logistics is growing as it is about to be sold, here


"AP Eagers is not immune to the external trading environment which remains challenging," CEO Martin Ward says.

"The AHG business has been a wholly owned subsidiary of AP Eagers for only 60 days and, while its operating profit contribution since July is disappointing, it is not unexpected.

"It remains our firm belief that combining these two businesses to build a truly national footprint will place us in the strongest possible position to thrive as the industry continues to evolve and change.

"With the right strategy in place, a strong financial position, a focus on innovation, an appetite for investment and a keen management eye on efficiency, we are well placed to bring these two businesses together in a way that delivers value to our customers, our partners and ultimately our shareholders."

AP Eagers will provide more details on its progress towards integration when it reports its full year 2019 results in February.

 

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