Pendragon PLC (LON:PDN) shares dipped in early trading Tuesday as a weak performance in its UK motor division dragged down its pre-tax profits for the first half of the year.
The motor car dealership operator reported an underlying pre-tax profit for the first half of £28.4mln, 41.4% lower than the same period last year, while like-for-like revenues declined 0.9% to £2.4bn.
READ: Pendragon shares go into reverse as it sees bigger drop in first-quarter new car revenue than national average
The profit drop was driven primarily by a contraction in the group’s UK motor division, whose operating profit declined 45.4% to £25.4mln in the period as division revenues fell 1.5% to £2.1bn.
The decline was attributed to higher software costs and leasing revenue, although the firm said it would continue to invest in more used car sales capacity with the aim of doubling revenue by 2021 while also expecting double-digit revenue from its software as a service (SaaS) licensing for “the foreseeable future”.
Pendragon added that it expected its full-year performance to be “in line with expectations with an improved performance in the second half” driven by improving trends in used cars and new cars as well as operating cost savings.
The firm also upped its interim dividend by 6.7% to 0.8p per share despite the decline in profits.
Shares were down 0.2% at 24p.