Shares in Pendragon (PDG) rallied 6% to 20.6p on Wednesday as the motor retailer swung back into profit for the first quarter to 31 March 2021.

Despite all dealerships being closed due to Covid restrictions during the quarter, Pendragon’s well-invested digital business supported ‘good continuity’ of both new and used car sales and enabled new CEO Bill Berman to motor on with his impressive turnaround.

BACK IN THE BLACK

For the first quarter of 2021, Pendragon generated underlying pre-tax profits of £10.8 million, an £13.1 million improvement on the £2.3 million loss incurred in last year’s comparable quarter, thanks to cost-cutting, store closures and a lower interest bill.

Crucially, the online channel provided ‘a high degree of protection against the physical closure of stores’, said Pendragon, which delivered over 40,000 vehicles in the quarter against a prior year like-for-like comparison of 45,000 vehicles.

The £270 million cap was able to trade robustly through Covid restrictions by offering customers both home delivery and click and collect options. While Pendragon’s like-for-like new car volumes fell 8.4% in the quarter, this was ahead of the overall market’s 12% decline.

Operating profit in Pendragon’s Franchised UK Motor operations grew by 241% to £13 million year-on-year, while the operating loss at its Car Store unit remained flat at £700,000 and Pendragon’s aftersales operations, which remained open during lockdown, delivered a ‘good performance’.

WITHHOLDING GUIDANCE

Having reopened its dealerships on 12 April, Pendragon is well positioned to profit as pent-up demand is released, though management continues to withhold guidance given the uncertain economic outlook.

‘We have delivered a strong performance in the first quarter,’ said Berman, the former President and Chief Operating Officer of AutoNation, America’s largest automotive retailer, ‘demonstrating the benefits of our omni-channel offering. Building on the progress made in 2020, our online capabilities continue to gain momentum as we advance our strategy and this has contributed to a resilient sales performance in the period.

‘With the easing of Covid-19 restrictions and the reopening of non-essential retail last week, we are delighted to be welcoming back customers to our dealerships and we are well positioned for the important trading period we have ahead of us.’

READ MORE ON PENDRAGON HERE

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Issue Date: 21 Apr 2021