LONDON (ShareCast) - Car dealership franchiser Pendragon saw underlying pre-tax profits accelerate in the first half year.

Chief Executive Trevor Finn said the group drove like-for-like gross profit improvements in all motor sectors and its used-car results continued to outperform the market.

He added: “A step change reduction in debt during the period has decreased debt to below £150m. The combination of reduced debt and the successful refinancing has ensured the group has conservative levels of borrowing and a robust balance sheet.”

The debt improvement was driven by asset disposals, working capital improvements and movement in contract hire vehicles.

Underlying profit before tax rose 24% to £23.6m on revenue that was 5.0% higher at £2.02bn thanks in the main to greater volumes.

Pendragon said it had benefited from strong first half growth in the new vehicle market, particularly the new retail vehicle market, and added that it expected this would continue to grow in the second half of the year, along with the after-sales sector.

Broker Panmure Gordon, after the company met with analysts, said: “The key message from Pendragon on the market looks consistent with other operators, and a recovery in aftersales looks imminent over the coming years due to the strength in the new car market.”

Analysts Mike Allen and Paul Jones noted: “Cash generation was a key focus in the lead up to the re-financing earlier this year, and is expected to remain the case going forward, albeit most of the benefits will be H1 weighted in line with other years.”

Shares in Pendragon were up 3.45% to 30p at 16:19 on Tuesday.

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