Shields Automotive is predicting a return to profit following a restructuring programme which has significantly cut its operating losses and debt.

The Glasgow-based dealership suffered a large dip in sales following the collapse of MG Rover in 2005, recording an almost £1m pre-tax loss in its end of year financial report.

Recent restructuring, which has involved selling premises in Glasgow and closing its Inverclyde dealership, helped reduce this figure to £337,000 for the year ending June 2006.

During this period the group also cut its staff by 42 to 197, including 27 aftersales personnel, reducing its payroll by £675,000 to £4.8m. Shields has since added Mitsubishi and Mazda franchises in Hamilton and is thought to be seeking another, although it refused to comment on this. The group terminated its Peugeot franchise in Glasgow in April this year.

Founded in 1994 after its directors bought Lex Rover in Glasgow, Shields spent an estimated £10m on facilities in its first eight years. The group now has two sites, in Glasgow and Hamilton, selling new Toyota, Land Rover, Mazda, Mitsubishi and Peugeot, as well as used cars.

MG Rover’s collapse cost the group more than £5m turnover from £71.6m in 2004 to £66.1m in 2005, but property sales helped return a £2.7m profit for the financial year. Turnover in 2006 was also down at £63m.

Shields’ financial statement for 2006 said: “Any cessation of a relationship with a manufacturer will result in a loss of some business.

“The company has been successful in transferring many of its MG Rover customers to other brands that it represents.”