LONDON (ShareCast) - (Sharecast News) - Car dealership Pendragon said on Tuesday that it swung to a full-year loss as revenues declined amid 'subdued' new car sales.
In the year to 31 December 2018, the company suffered a pre-tax loss of £44.4m versus a profit of £65.3m the year before. Total revenue was down 2.4% during the year to £4.63bn, with like-for-like sales 1.3% lower.

Underlying pre-tax profit declined 20.9% to £47.8m.

Revenue in the used car segment was down 2.4%, while new car sales were 3.8% lower but still outperformed the UK market, which was down 6.8% in 2018, with UK new revenue down 5.2% on a LFL basis.

Gross profit in the used car business was up 4.9%, but profit in the new car segment fell 8.3% following continuing margin pressure in the premium sector.

The company cut its dividend per share to 1.50p from 1.55p a year earlier and said that its share buyback programme has been paused.

Chief executive Trevor Finn said: "We continue to focus on our strategic priorities and the reallocation of our capital into the areas we see as providing the strongest long-term growth. We have seen strong performance in used cars in the second half of the year, with the transformation of preparation facilities and processes now embedded in our car stores. We anticipate this will carry on into 2019 and beyond as our new car store businesses further boost our used car growth.

"New car sales have been subdued and consumer confidence has been adversely affected in the period by macro newsflow. However, our software business is continuing to win market share and has now deployed systems in twelve overseas countries. Our leasing business has grown profitability with a stable base of vehicles under management."

Pendragon said that given economic and market conditions, it expects its 2019 performance to be broadly stable against 2018, underpinned by used car profitability.

At 1255 GMT, the shares were up 0.8% to 26.60p.

Berenberg said the drop in underlying pre-tax profit is no surprise given the tough dynamics which plagued the UK motor industry in 2018.

"While some of these challenges remain, Pendragon's equity story is more about how it can create value from its growing used-car, software and leasing businesses, all of which have accelerated profit growth.

"With major disposals also on the table, there is a pathway for value creation here. For now we remain holders, but recognise that our view could change should certain catalysts play out over the course of 2019."

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