Auto Trader Group PLC (LON:AUTO) saw its shares fall this morning despite the online car dealing group tripling its dividend after reporting solid full-year profit growth, impacted by cautious comments about an anticipated decline in new car registrations in the UK.
For the year ended March 31, the FTSE 250-listed group posted a 23% jump in pre-tax profit to £193.4mln, up from £155.0mln a year earlier, as revenue increased by 9% to £311.4mln, up from £281.6mln.
The firm said its revenue was boosted by an average 12% increase per month of minutes spent by consumers across its online sales platforms to 582mln, up from 521mln, and an average 16% rise in cross-platform visits per month to 55.4mln from 47.9mln.
Auto Trader added that advert views on its platforms were up 2% per month to 247mln from 243mln, and physical car stock on site was 3% higher at 450,000 on average, up from 437,000.
The group said it will pay a final dividend of 3.5p, taking its total dividend to 5.2p, more than triple the 1.5p paid the year before.
New financial year has started well
The firm’s chief executive, Trevor Mather said: "The new financial year has started well, and despite the wider political and economic uncertainty, the board is confident of delivering its growth expectations for the coming year.”
However, he added: "After a number of years of near uninterrupted growth, and despite the exceptionally high performing first quarter of the calendar year, the industry now expects new car registrations to plateau or decline but continues to anticipate growth in used car transaction volumes.”
Reacting to this, Auto Trader shares were 3.4%, or 14.7p lower at 417.0p in afternoon trade.
Increasingly difficult conditions facing the industry
George Salmon, equity analyst at Hargreaves Lansdown noted that Auto Trader’s “results were marginally ahead of market expectations, although the number of retailers signed up to the website fell slightly more than had been expected.”
In a note to clients, he added: “One worry for the group is the increasingly difficult conditions facing the industry.
“Clouds of doubt hang over the economy, and after a scramble to register new cars before April’s hike in vehicle excise duty, new car sales now look likely to fall this year. This is unlikely to impact used car sales in the short-term, but any decline will likely feed through to the used car market over time.”
-- Adds share price, analyst comment --