DOMINANT eastern states automotive retailer AP Eagers has reported a string of records in its 2015 calendar year annual report, including a 42 per cent leap in profits from car sales.

AP Eagers managing director and CEO Martin Ward said the outlook was equally as optimistic, although attention will be aimed at its truck operations that in 2015 had a 7.8 per cent fall in revenue, the main shadow on the balance sheet.

The company posted a profit before tax of $121 million – a record and up 17.6 per cent on 2014’s $102.8 million – on revenue of $3.25 billion, an increase of 14 per cent on the $2.86 billion posted in 2014.

Mr Ward said revenue increased on stronger trading performances in Queensland overall – although there was some weakness in the south-west of the state – and New South Wales.
Profits were aided by the 19.9 per cent stake in rival auto giant Automotive Holdings Group (AHG) Ltd that, in the past six months, reported a net profit of $49.4 million, up 7.3 per cent over the same period in 2014.

AP Eagers’ investment in AHG earned it dividend income and the stake was last week valued at $275.3 million.

Mr Ward said AP Eagers’ Queensland, Northern Territory and NSW car divisions capitalised on the strong growth in vehicle sales in 2015.

“This included a full year’s contribution from the Boettcher Group and the Black Group businesses acquired in the second half of 2014 which were boosted further by better than expected performances from the Boettcher Group and Central Highlands Toyota,” he said.

“Continued focus and improvement to our used car operations yielded another record result from this segment of the business.

“The strategy of expanding our footprint in this segment, taking advantage of the associated finance, insurance and car care income opportunities and consolidating market share nationally continue to produce accretive income and act to insulate overall trading results against fluctuations in the new car market and individual franchise performance.”

The company said the relocation and consolidation of the Eagers Parts Distribution Centre from Newstead to Eagle Farm, Queensland, in conjunction with a significant investment in state of the art warehousing and logistics systems, supported a full-year record parts result.

It now expects further gains when it moves its Metro Ford Parts Distribution Centre into the Eagle Farm facility by early 2017.

“This warehouse facility will support the majority of franchises represented in South East Queensland in the single, largest and most efficient parts distribution centre for OEM vehicle parts in Queensland,” Mr Ward said.

AP Eagers, which owns much of its property, said the value of its portfolio decreased to $249 million as at December 31, 2015 – compared to $278 million as at December 31, 2014 – due primarily to the disposals of properties in Fortitude Valley and Newstead.

“Property segment profit contribution of $16.3 million was higher than the previous year of $14.8 million, due to a $3 million net realised gain on properties sold,” Mr Ward said.

In his outlook for 2016, Mr Ward said the national new-vehicle market continues to grow with low interest rates supporting customer affordability and “exceptional product offerings” driving customer demand.

“Strategically, the company remains focused on automotive retail and a two-pronged approach of driving value from existing business through process improvement, operating synergies, portfolio management and organic growth, whilst taking advantage of value adding acquisition opportunities as they present themselves.”

Mr Ward said the key areas in 2016 are selective dealership and “ancillary market” acquisitions, launching its Carzoos used-car model, developing its Queensland facilities and turning around its truck division.

By Neil Dowling