Pendragon forecasts £45m to £50m 2021 profit in pre-close update

Pendragon has followed criticism over its lack of trading statements with a pre-close update forecasting full-year 2021 underlying profit before tax of £45 million to £50m.

The AM100 car retail PLC said in this morning’s (June 30) statement that it “remains confident in the long-term outlook”, in-spite of ongoing automotive sector uncertainty resulting from the COVID-19 pandemic and the global shortage of semiconductor microchips.

It also forecast a £30m underlying pre-tax profit for the first half of the year, up 196.8% on a period devastated by the UK’s first COVID-19 a year earlier.

The group’s statement said: “The group has continued to make strong progress against its strategic aims during the second quarter of FY21, outperformed in its new car markets and capitalised on favourable trading conditions, in particular in the used vehicle market where supply constraints and pent-up demand have increased vehicle pricing, driving higher margins.

“The group executed well during this period, and as a result of particularly strong conditions in May and June, expects to report Group underlying profit before tax of c.£30m for the first-half of FY21 (H1 FY20: underlying loss before tax of £31.0m).”

Pendragon’s statement comes less than 24 hours after major shareholder and Swedish car retail group boss, Anders Hedin, criticised the PLC’s “silence” as Vertu Motors, Marshall Motor Group and Lookers all upgraded their trading performance in market updates.

In an open letter to other investors, Hedin – whose Swedish business employs former Pendragon CEO Trevor Finn – suggested that the lack of updates could be linked to bonus payments to Pendragon chief executive Bill Berman.

A spokesperson for Pendragon told AM: “Pendragon maintains regular and constructive engagement with its shareholders and doesn’t comment on their private conversations with them.”

The spokesperson said they were unable to provide further comment.

Today’s statement from Pendragon conceded that there remained “continued uncertainty” in the automotive retail sector.

It suggested there would be “potential further disruption from COVID-19, an expected realignment of used vehicle margins and the risk of both new and used vehicle supply constraints”.

The group added: “Whilst the extent of the impact of the well-publicised semi-conductor chip shortage is not yet clear, it is becoming increasingly apparent there is likely to be some restriction of supply during the second-half of FY21, with vehicle order times already being extended.

“As a result, there remains a wide range of possible outcomes for the full-year.”

Pendragon’s statement added: “However, the Group now has more visibility on the outlook than at the height of the pandemic and is therefore in a position to reinstate guidance.

“Accordingly, Group underlying profit before tax for FY21 is now expected to be in a range of approximately £45m to £50m (FY20: £8.2m).

“The Board continues to believe that the group’s strategy positions it well to respond to the ongoing market uncertainty and remains confident in the long-term outlook.”