The profit figure is also higher than what Eagers expected in its December announcement to its shareholders and the Australian Securities Exchange.
Eagers managing director Martin Ward in December said he expected Eagers to end 2020 with a full year profit of $195 million to $204 million. This compares with the 2019 full year return of $100.4m.
“The improved profit result compared to guidance has been delivered by stronger underlying operating profit before tax for both the car and truck retailing businesses,” he said.
In its December statement, Mr Ward said the 2020 year represented the first full year of trading since the company bought Automotive Holdings Group Ltd (AHG).
Of the year, he said: “Vehicle sales have continued to rebound strongly from the historical lows experienced during April and May 2020 when nation-wide COVID-19 restrictions were in place.”
“Customer orders have continued on their strong trajectory and supply constraints caused by global manufacturer factory closures during the June quarter have started to ease as demonstrated by the 12 per cent uptick in national vehicle deliveries recorded during November by VFacts.
“The industry’s tight inventory position, combined with the company’s cost reduction initiatives implemented following the merger with AHG and in response to COVID-19, have driven Eagers Automotive’s strong underlying trading performance.”
The $209.4m profit – which will be confirmed by the company on February 24 following the completion of an external audit – does not include business acquisitions, disposals, property valuation changes, compensation and COVID payments and any compensation from Holden.
Martin Ward
During the 2020 year, Eagers sold its Daimler Trucks 16 national truck and bus and service centres and property on which Stillwell Trucks is located for $108m.
It said that this would result in an estimated net gain of $32m to $36m. This sale is expected to be finalised in the first quarter of this year and not included in the 2020 figures.
During the 2020 year, it also bought some of the property on which its dealerships are sited.
This included a 4.3-hectare (10.6-acre) site in Castle Hill, in the north-west of Sydney.
Eagers leases the site from property trust Charter Hall and in a statement to the Australian Securities Exchange, said it proposed to buy the land for $76.25m.
It said the property, at the corner of Victoria Avenue and Windsor Road in Castle Hill, “is poorly configured and under-utilised.”
When Eagers bought AHG late last year, the Castle Hill site had Holden, HSV, Infiniti, Nissan and Hyundai franchises. The Holden, HSV and Infiniti brands have since left Australia.
In addition, it announced it would buy a further eight properties that hold its dealerships.
These include Big Rock Toyota (Balcatta, WA); South Morang Toyota (South Morang, Victoria); Sutherland Mazda (Kirrawee, NSW); and five properties at Zupps dealerships in Mt Gravatt, Queensland.
In March last year, Eagers sold AHG’s asset, Refrigerated Logistics, to Sydney-based capital equity company Anchorage Capital Partners for $100m.
By Neil Dowling
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