AP Eagers prevailing against tough conditions


First half results see profits rising despite poor truck market and AHG share price volatility

AP Eagers prevailing against tough conditions
Martin Ward says truck division’s performance was disappointing

 

Car sales took the heat AP Eagers as it recorded a 5.7 per cent rise in half-year net profit of $33.1 million despite a poor showing with trucks.

Net profit before tax, earnings per share and its interim dividend were at record levels for the vehicle retailer, in the face of a national decline is car sales, while revenues were up 2 per cent to $1.375 billion.

"The National Truck division (Truck Retail segment) profit before tax was disappointing at $3.4 million compared to $4.3 million for the pcp [previous corresponding period]," the managing director Martin Ward says.

"Challenging new and used heavy truck trading conditions resulted in a decrease in revenue of 10.1 per cent."

Trucks revenue was $194.7 million compared with $216.5 in the pcp as new truck sales fell 5.3 per cent.  

The company’s investment in fellow vehicle retailer Automotive Holdings Group (AHG) has proved somewhat volatile.

Its investment segment saw a pre-tax loss of $4.6 million compared with a pcp loss of $4.2 million "due to an unrealised revaluation loss on the [AHG] investment of $7.8 million reflecting a closing June 30 2014 AHG share price of $3.65 per share compared to $3.78 as at 31 December 2013", AP Eagers says.

It notes that as of June 30 the 18.7 per cent strategic investment in AHG had a market value of $209 million.

"Subsequent to June 30, the investment in AHG was increased to 19.9 per cent," it says.

"As at the closeing share price of 27 August of $4.01 per share the total market value of the investment is $244 million."

The sale of its 20.65 per cent interest in MTA Insurance (MTAI) to Suncorp Insurance has been completed, with the result that it "may provide additional after tax earnings of approximately $4 million", Ward says.

MTAI provided $880,000 to net profits, up from $828,000 in the pcp.

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