Caffyns profitability rockets to 1.1% amid falling car sales

South of England car dealer group Caffyns has clawed soundly back into the black amid the coronavirus pandemic thanks to efficiencies, state support and investment in online sales. 

Its anual return on sales has climbed to 1.1% from the 0.1% recorded the prior year, as underlying profit before tax reached £1.876 million (2019/20: £251,000).

Revenues dropped 16% to £165.1m (2019/20: £195.8m), as new car volumes fell 10% and used car volumes slumped 19.4%. 

In all, the AM100 dealer group's showrooms were closed for six of the 12 months in its financial year ending March 31, 2021, leaving the business reliant on click-and-collect sales operations.

Chief executive Simon Caffyn said: "Covid-19 had a material impact on the business with turnover falling by 16%. However, the actions we took to improve efficiencies, coupled with investment in online selling and support from Government, allowed us to weather the periods of showroom lockdown and maximise sales when possible.

"I am delighted that everyone within the company adapted quickly and rose to the challenges we faced, enabling us to deliver a profit before tax of £1.9 million, a significant improvement on the £0.25 million recorded last year."

Caffyns said its margins improved, largely from very buoyant trading in the period from June to October 2020 as the business re-opened from the first lockdown in April and May 2020, and the company also implemented a cost-savings programme and, in addition, received significant furlough and grant support from the Government and from local councils.

Across the year Caffyns received £2.4m from the Coronavirus Job Retention Scheme.

"In the light of the scale of Government support made available to the company in the year, and continuing uncertainty over the future path of COVID-19, the board is not proposing a final dividend for the year (2020: nil pence per ordinary share). No interim dividend for the year was declared, against a 7.5 pence interim dividend in the comparative year," it added.

The dealer group added that the year has presented stakeholders with significant challenges: many employees have continued to work throughout the pandemic in difficult conditions whilst others have had to face the implications of furlough; shareholders have seen no dividend income this year; and its manufacturers have seen significantly reduced activity levels.

For these reasons, it said, salary repayments given to staff affected by the temporary £37,500 salary ceiling Caffyns brought in at spring 2020, in recognition of their hard work to restore its sales out of lockdown, had excluded members of the board.

In addition, the executive directors have declined their bonuses for the year that, ordinarily, would have been payable based on the achievement of financial targets set for the year.

Caffyn said: "I am very grateful for the dedication of our employees and the effort they continue to apply to provide our customers with a first-class experience. Their response to the covid-19 pandemic has been outstanding and the board would like to particularly thank those that remained active throughout the initial lockdown period.

"This ensured that we were able to offer an emergency aftersales response to NHS and other key workers. We have been, and remain, very focused on the health and safety of our employees and customers. Our showroom and workshop activities have been undertaken in a responsible and socially distanced way throughout the year.

"As a result of the hard work and professionalism shown by everyone involved, we have managed the lockdown periods well and were able to reopen our showrooms in April 2021 in a strong position."