MAJOR New Zealand automotive group Turner Automotive has defied global economic shocks by posting record earnings on the back of business strength but predominantly attributed to a booming used-car market.

Turners benefited from used-car price increases in line with soaring demand and a strong insurance business.

The listed company, which has 30 outlets, reported record earnings for the financial year to March 31 with revenue up 15 per cent to $342 million; earnings up 11 per cent to $47.7 million; and profit after tax up 16 per cent to $31.3 million.

Earnings came from Turners’ automotive retail, finance and insurance businesses which operate in the used car market.

With demand for used cars, attributed to COVID and a weak supply of new cars, came increased demand for car insurance and maintenance as purchasers of used cars invested more money into maintaining their existing assets or buying insurance.

It reported that market share increased along with an expansion of outlets. These include a new branch and redevelopment of its Rotorua outlet, and new sites in Nelson, Timaru and Napier.

Turners CEO, Todd Hunter, said: “Our brand value is growing across all our key business divisions, but the investment we have made in the Turners brand, in particular, has created real tangible value both internally and externally.

“Whilst the near-term economic outlook is looking much more uncertain, our business has never been in better shape and we are ready for whatever comes next.”

The company said in its annual report that “sourcing of vehicles in the local market has been a top priority and our investment in the very popular ‘Tina from Turners’ brand campaign has helped build our inventory of locally owned cars, with ‘owned’ inventory sales up 25 per cent on the previous financial year.”

“Despite the Omicron impacts still being felt, the year has started well, with April 2022 results ahead of April 2021.

“However, whilst pandemic uncertainty has decreased, NZ’s economic uncertainty has increased.”

Turners said it expected to see upside from the new branches in the second half of this financial year and the “supply-constrained market” to continue primarily due to impacts on the new car supply chain and government regulation.

“With the rapidly changing interest rate environment, our priority in finance shifts to margin management,” it said.

“In insurance, we expect new policy sales to be buoyant based on our distribution and market share gains and (we expect) claims ratios to stabilise.

“Lastly, in credit management, levels of bad debt recovery are slowly starting to build.

“We are confident that we have good growth prospects in auto retail and insurance. Finance margins will be impacted in the short term as we deal with the rapidly changing interest rate environment.”

Turners said that inflation and interest rates were “the macro headwinds currently challenging the company’s ability to grow as fast as it would like.”

It said that looking beyond FY23, it remained “very confident” about further growth over the medium to longer term and has updated its three-year rolling target to cross over $50 million of profit before tax by FY25.

“Overall, we are ready for what is next and the business is in the best shape it has ever been.”

By Neil Dowling