Turnover rose to £754.91m, up from £528.83m in 2004, while gross profit was up from £82.19m to £108.76m. Operating profit, excluding exceptionals, was up from £15.8m in 2004 to £20.6m.
Chief executive Richard Palmer says: “We have produced record trading profits in a period in which the new car market fell by 5% – an outstanding achievement. Our established businesses increased their profits by 10% on a like-for-like basis, our recent acquisitions are performing well and we expect to make further progress in the next 12 months.”
In his outlook for the year ahead Palmer says: “Our March performance was exceptionally good giving us our best ever start to a new financial year. Naturally, acquisitions made up a large part of the increase but we are very pleased to report that our performance for the first full month is also better than last year.”
One city analyst agrees that EMH has had a good year, although he says the underlying business was essentially flat.
“Old EMH business has been broadly flat in terms of vehicle sales although Jaguar in particular did surprisingly well. The group’s acquisitions have done well and on balance EMH still rates as one of the best quoted motor retailers in the market.”
#AM_ART_SPLIT# Improvement from VW
EMH’s £30.5m acquisition of north-west based SKF group in July 2005 gave it eight VW car franchises, representing the whole of the Greater Manchester region, one VW van franchise and four Audi franchises.
As a result of the SKF acquisition, performance in the financial year was boosted by a 39% increase in Volkswagen registrations.
Palmer says: “While our Volkswagen businesses do not currently generate the same levels of returns that we achieve elsewhere in the motor retail division, their performance has improved and the other benefits that their volumes give to the group in our relationships with suppliers is extremely valuable.”
Against a backdrop of a 5% decrease in UK new car volumes last year, EHM managed to grow its motor retail division profit by 27% to £22.8m. While acquisitions made a significant contribution to this increase, the profit from operations of its core businesses increased by 10%.
Premium brands the key
Palmer says the trend of the group’s premium brands capturing sales from their volume competitors has continued, with its established brands increasing their market share by 38% over the last five years.
Land Rover sales for the financial year increased by 2%, the profit before taxation of the businesses rose by 22% in the period, principally as a result of a strong contribution from the Range Rover Sport.
EMH’s Volvo businesses in the north east increased sales by 4% despite Volvo’s national registrations dropping by 4%. The group’s six Audi centres also had a good year and have sold nearly all their 2006 allocation of the Q7 SUV.
Bentley had a strong year with its national registrations increasing by more than 5% in 2005. “We have an excellent opportunity to develop our three Bentley businesses in the North and East of the country where we are responsible for 13% of the sales for the brand in the UK,” says Palmer.
With EMH enjoying a 2.8% return on sales for its Jaguar business, against a national return on sales of 0.2%, the group describes 2005 as an excellent year in what was, for Jaguar, a period of relative product inactivity.
Palmer is looking for further growth with preferred partners.
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