Auto Trader PLC (LON:AUTO) said it expects economic uncertainty to continually impact private car listings this year in addition to a general decline in the UK’s new and used car markets.
The FTSE 250 company, which specialises in advertising second-hand cars, reported that pre-tax profits had risen 10% to £210mln in its full-year results, with revenues rising 7% to £330.1mln.
Dividend raised but sector forecast to decline
The group also upped its final dividend to 4p from 3.5p the previous year, with a total dividend of the year of 5.9p, up from 5.2p last year.
In its outlook, the company said that the successful monetisation of its Dealer Finance product, combined with continued upsell onto higher level packages and further penetration of Managing products, would deliver higher levels of price and product ARPR growth in 2019.
They added that average retailer forecourts were expected to decline at a similar rate to the previous ear, while economic uncertainty was likely to continue impacting private listings.
Despite this, the firm said it was confident of meeting growth expectations, while low to mid-single digit growth in operating costs would result in an increased operating profit margin.
The company also commented on the UK car market, saying that industry forecasts expected a continued decline in the new and used car markets for the rest of 2018.
Auto Trader chief executive, Trevor Mather, said: "This has been a strong year of revenue and profit growth for Auto Trader, driven predominately by retailer and manufacturer adoption of the new products that we launched throughout the year.
He added: "We have taken a big step in our strategy of improving car buying in the UK by launching the Dealer Finance product which allows consumers to find their next car by monthly payment and allows retailers to advertise finance on their cars earlier in the buying journey. Auto Trader is uniquely placed to help current customers and other automotive players adapt to the evolving automotive environment in the UK, and despite the challenging conditions for our customers in the past 12 months we have clearly seen that those who engage more closely with our products and our data are able to gain market share and improve efficiency.”
In a note to clients, analysts at Liberum commented: “AutoTrader is in a strong secular position, being the leader by a significant factor in the online classifieds automotive market and a “must have” product for car retailers. However, unlike Rightmove which we downgraded to Hold yesterday, we think that AutoTrader’s share price still has significant upside, with a 36% upside to our Target Price. The Dealer Finance product should be a significant driver.”