Turners posts higher half-year profit
A strong New Zealand dollar, heavy discounting of new cars and an influx of imports from Japan have created a buyers' market for used vehicles, Turners Group says.
The listed car auctions company, which released its half-year results today, said it expected good trading conditions for the second half of its financial year.
Profit after tax for the six months to June 30 rose to $2.27 million, a 6 per cent increase on the same period last year, on revenue that rose 19 per cent to $49.6m.
Motor Trade Association figures for June show annual car sales were on track to top 200,000 for the first time in nearly a decade as used imports accelerate on a strengthening New Zealand dollar.
Compared with last year's half-year result, revenue from Turners' fleet division increased 36 per cent to $28.8m, while finance division revenue rose 41 per cent to $3.8m.
The company's auction revenue fell by 5 per cent to $17m over the same period.
Despite a slight fall in auction revenue, Turners chief executive Todd Hunter said, the result showed a "pleasing recovery" of the auction division after its loss of a lucrative contract with car insurer IAG early in the last financial year.
Sales from Turner's fleet division, where vehicles are acquired and sold by Turners, had exceeded auction revenue for the second six months in a row, he said.
Fleet sales had benefited from the growing popularity of Turners' services, which allowed customers to sell and buy cars for cash, rather than through auction.
More retail customers compared with wholesale customers had helped drive the increase in revenues from the finance division, Hunter said, with the loan book growing to $30.5m at the end of June.
He said the company was continuing to roll out its multi-channel sales model and was seeking new transactional channels with its customers, including an online tender channel for dealers and social media initiatives.
In line with previous experience, Hunter said, the company expected to see revenue increase in the second half.
The outlook for full-year profit was an increase of 5 per cent to 10 per cent over last year's $4.8m full-year profit, he said.
Turners shares rose 5 cents to $3.10 in morning trading, up 1.64 per cent on their closing price yesterday.