Hundreds of jobs to go at Pendragon as it posts near-£130m loss

Pendragon today announced hundreds of job losses as it published a post-tax loss of £129.6m for the six months to June 30.

The troubled motor group, which made £21m profit in the same period last year, said it would be axeing 22 of its 34 Car Stores and one of its three preparation centres. It is still searching for a managing director for the division.

Its underlying pre-tax loss figure was £32.2m against a like-for-like profit of £28.4m.

Group revenue was £2.455bn – a 0.8 per cent drop on last year. Used revenue was up 3.9 per cent, new revenue up by 1.7 per cent, and aftersales up by 3.23 per cent, but its US Motor division suffered a 5.3 per cent drop.

It said that although total Car Store sales grew by 16.4 per cent, operating losses increased by £12.7m to £19.1m through a combination of an increase in operating costs, mainly because of adding nine locations year on year, and a decline in the gross margin rate from seven per cent to 3.1 per cent. As a result, some 300 jobs will be lost.

Meanwhile, its Franchised UK Motor division, which includes its Evans Halshaw and Stratstone brands, made an operating loss of £7.7m against a like-for-like profit of £31.8m.

Non-executive chairman Chris Chambers, who – it was also announced today – will step down on October 1, said: “Whilst market conditions have been challenging in the first half of 2019 with headwinds in both the used and new car markets, the group has continued to deliver like-for-like revenue growth.

“However, there has been a material decline in the group’s profitability, principally as a result of the actions taken to address excess used car stock.

Non-executive chairman Chris Chambers, who – it was also announced today – will step down on October 1, said: “Whilst market conditions have been challenging in the first half of 2019 with headwinds in both the used and new car markets, the group has continued to deliver like-for-like revenue growth.

“However, there has been a material decline in the group’s profitability, principally as a result of the actions taken to address excess used car stock. We made significant progress reducing this exposure in the latter period of the first half and we remain committed to the strategy of growth in the group’s used car proposition. The business is fully focussed on maximising performance, but we expect the market to continue to be challenging during the second half of 2019.”

In its outlook, the company said: “Economic and market conditions are very challenging. The heightened political and Brexit uncertainty, as to both outcome and timing, is adversely affecting customer confidence. We are not anticipating any improvement in this for the rest of our financial year and are closely monitoring market conditions and customer behaviour particularly during the important trading month of September.

“As a result of these market conditions, group underlying loss before tax for FY19 is now expected to be at the bottom of the board’s expectations. This outcome still reflects a meaningful recovery in profitability during the second half based upon self-help actions that the business is taking, as well as the assumption that current market conditions do not deteriorate further.”

Non-executive director Bill Berman is to assume the newly created role of executive chairman with effect from October 1 but on an interim basis. Pendragon said he would provide leadership and strategic direction for the company while it continued its search for a new chief executive, following the sudden departure of Mark Herbert in June after less than three months in the role.

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