Shares in family-owned car dealership Caffyns (CFYN) reversed 17% to 345p on Friday after the Eastbourne-based motor retailer reported a collapse in first half profits.
One of the country’s longest running dealerships, founded over 150 years ago, Caffyns has successfully traded through many an economic cycle, but hasn’t been able to swerve the short term supply challenges and Brexit-related uncertainties that continue to hurt the automotive retail sector.
PROFITS SKID LOWER
For the first half to 30 September, Caffyns posted a slump in underlying pre-tax profit from £1.19m to a mere £170,000 as like-for-like new car sales crumbled 14.5%. Used car sales fell 2.3% due to a weak performance from Caffyns’ Motorstore business, although aftersales revenue continued to grow and a maintained 7.5p dividend demonstrates confidence the company can weather the storm.
As chief executive officer Simon Caffyn commented: ‘Whilst disappointing, the results should be read against a difficult economic and political background. This was compounded by supply problems for new cars. These supply issues have however improved, and we remain cautiously optimistic about the future outlook.’
DELIVERIES DISAPPOINT
During a testing half Caffyns, which represents brands including Volkswagen, Audi, SEAT, Vauxhall and Volvo, encountered weaker consumer demand caused by ongoing Brexit uncertainty. Big ticket purchases have been put on the back burner and new car sales have remained under pressure for much of 2019.
An additional headwind was created by the second stage of the implementation of the harmonised emissions testing regime, ‘Real-Driving Emissions’, which impacted new car deliveries to dealerships for the industry’s pivotal September number plate change month.
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Seasoned industry player Caffyn expressed confidence in the longer term prospects for his charge, insisting that despite ‘a weak marketplace for the bi-annual registration plate change in September, we are cautiously optimistic about the future outlook.’
However, he also cautioned that ‘our full year outcome will remain heavily dependent on the success of the next bi-annual registration plate change in March 2020 as well as on the wider challenges to the UK economy including uncertainty surrounding the Brexit process.’
