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Auto Trader skids slightly, predicts near-term revenue decline as car market recovers from coronavirus impact

Published: 10:30 25 Jun 2020 BST

Auto Trader Group plc - Auto Trader hits the skids, predicts near-term revenue decline as car market recovers from coronavirus impact

Auto Trader Group plc (LON:AUTO) shares skidded a little on Thursday after the car selling website expected a short-term decline in revenue and withheld guidance and the industry began to slowly recover from the coronavirus pandemic.

In its results for the year ended March 31, 2020, the FTSE 100 group reported a pre-tax profit of £251.5mln, up 4% on the prior year, while revenues rose 4% to £368.9mln.

READ: Auto Trader offers 25% discount in June after reopening

The company also said average revenue per retailer forecourt (ARPR) was 6% higher at £1,949 per month, with growth from product and price offsetting a reduction in stock.

Auto Trader added that its audience engagement had remained strong across its platforms, with cross platform visits per month up 3% at 50.8mln.

Into the new year, the company said following the UK’s lockdown in late March, its retailers have been able to reopen their showrooms since June 1, and that both visitors and enquiries had “rebounded strongly and are now at record levels”.

Auto Trader said there were also high levels of demand in the market and used car pricing had remained strong, although despite this the number of retailers had declined by 3% between April and June.

Looking to July onwards, the firm said based on current trends it expected retailer revenue from that month to be “down by mid-single digits” year-on-year, and that given the continued uncertainty it was “difficult sensibly to provide guidance on what the number of retailer forecourts or the level of stock might be over the coming months”.

However, the company said it was still confident in its long-term growth prospects, adding that they believed the pandemic will “only accelerate the shift towards greater digitalisation of the car buying process”.

"Since the early stages of the pandemic we have endeavoured to act decisively and responsibly to ensure we and our customers could emerge in as strong a position as possible when the crisis passes. We've been encouraged by the strong initial bounce back in used car demand, and whilst the short-term outlook remains uncertain, we believe the case for moving more of the car buying process online is stronger than ever. We are looking forward to making this a reality with our customers in the years ahead”, said Auto Trader chief executive Nathan Coe.

In a note, analysts at Peel Hunt retained their ‘buy’ rating and 545p target price, saying the “strong ed-demand” following the relaxation of lockdown measures was “fundamentally encouraging”.

“The market may focus on the consensus downgrade, or forecourt numbers before digesting the near-term end-market demand”, the broker said, adding that investors should “look to buy on sustained share price weakness”.

Shares in Auto Trader were 1.1% lower at 520.2p in mid-morning trading.

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