Car dealership Caffyns (CFYN) accelerates 11.1% to 602.5p on superb full-year results to end-March and a 50% dividend hike. The family-controlled company is the latest listed automotive retailer to report ongoing strength in the UK new car market.
Helped by rising consumer confidence and support from vehicle manufacturers, the new car market continues to flourish. Given sluggish recovery in Europe, car manufacturers are keen to offer British consumers highly-affordable financing deals.
Against this favourable backcloth, Caffyns is stepping on the gas, reporting a 78% surge in annual taxable profits to £2.17 million on sales up 17.1% to £193.2 million. CEO Simon Caffyn attributes the year's success to the £15 million cap's strategy of trading from larger sites and focussing 'on our excellent franchises', a list that includes Land Rover and Audi as well as Vauxhall and Skoda.
Caffyns, able to trace its origins back to 1865, drove an improved performances in new cars, with like-for-like sales up 18.6%, well ahead of the 12.5% growth seen in UK new car registrations. In addition, used car sales continued the positive trend in last year's second half, 17.5% ahead year-on-year with margins on the up and gross profits beating expectations. Another key driver of profits progress was the 2.5% increase in higher-margin like-for-like aftersales revenues.
Asset-backed Caffyns generated a bumper £5.37 million of operational cash last year. Reflecting this financial strength, investors are treated to an improved final dividend of 12p (2013: 7p), taking the total for the year 50% higher to 18p.
Stellar numbers from Caffyns come hot on the heels of positive trading statements from its quoted-company peers. Manchester-based Lookers (LOOK), a running Shares Play of the Week, received another round of upgrades from analysts following its better-than-expected first-quarter trading statement earlier this month.
Meanwhile, franchised motor trader Cambria Automobiles (CAMB:AIM) recently revved in with forecast-busting half-time figures and acquisitive Vertu Motors (VTU:AIM) is enjoying organic market share gains in a buoyant new car market too.