Online car marketplace Auto Trader (AUTO) fell 2.4% to 580.2p as it announced a mixed set of first-half results and failed to pay a dividend for the period.

The company reported a slump in profit as revenue was hurt by its decision to offer promotions on advertising for customers on its platform, something which has been extended thanks to renewed lockdown conditions with free advertising for customers in December.

For the six months ended 30 September 2020, pre-tax profit fell 48% to £66.2 million year-on-year as revenue slipped 37% to £118.2m.

Trade revenue fell 38% to £100.2 million, driven by the company's decision to allow retailer customers to advertise on its marketplace for free during the lockdown months of April and May, and for a 25% discounted rate for the month of June.

Looking ahead, the company said it had started the second half of the year 'well' and forecast total costs for the full year were likely to decline at a rate of low-mid single digits amid cost cutting measures undertaken.

ANALYSTS SPLIT

Numis analyst Gareth Davies sees the company coming out of the pandemic ‘stronger than ever’. He added: ‘Autotrader has reported a resilient performance for H1, coming in ahead of our estimates at every level.

‘The group exits H1 in a stronger position than ever (competitively/consumer/customer relationships), with an accelerated channel shift to digital providing the base for significant further product innovation.

His counterpart at Shore Capital, Roddy Davidson, was more cautious. ‘We regard Auto Trader as a well-managed company with a strong business model and competitive position,’ he noted. ‘That said, we remain concerned that a Covid-19 induced recession could have a sustained and material impact on its customer base and, importantly, its ability to secure material price increases and upsell retailers to higher value subscription products.’

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Issue Date: 05 Nov 2020