Julian Carter, analyst for broking firm, Numis has described BCA's (LON:BCA), (formerly British Car Auctions) interim result as ‘strong’ with underlying earnings of £75.8mln up 18%, slightly ahead of its expectations.
Carter saw the most impressive element of the result as being clear evidence from volume metrics that BCA is growing its share of used car transactions.
This prompted the broker to raise its profit forecasts by 2-3%, while keeping its earnings per share (EPS) unchanged at 10.7p to reflect the higher fully diluted share count.
With regard to the group’s balance sheet, net debt was higher than expectations at £287.4 mln owing to higher capex and the timing of inventory build, a situation which is expected to reverse in the second half and help reduce year-end net debt to circa £260m.
Automotive Services stars
Focusing on divisional performances, the Automotive Services business grew underlying earnings by 13% assisted by an acquisition.
Numis has retained its 'buy' rating while raising its price target to 250p, up from 235p.
Earlier, the company, which owns the WeBuyAnyCar website, said sales broke through the £1bn barrier for the first time ever in the first half. The figure moved from £910mln in the comparable period last year to almost £1.2bn.
Chairman Avril Palmer-Baunack said: "Against the changing landscape of the European automotive and transportation sector, I am very pleased with the first half performance, which was at the upper end of market expectations. BCA continues to grow and go from strength to strength."