- New acquisition Autorama drags down results
- Shares down 2% to 615p
- Former Greggs Chair Matt Davies appointed to Board
Shares in online car marketplace Auto Trader (AUTO) were down more than 2% to 615p in morning trading as it reported a slight fall in pre-tax profits to £293.6 million for the year ending 31 March 2023 compared to £301 million in the same year-ago period.
NEW ACQUISITION DRAGS DOWN RESULTS
‘The only fly in the ointment’ for Auto Trader, according to Charlie Huggins, manager of the Quality Shares Portfolio at Wealth Club is the company’s recent acquisition vehicle leasing business Autorama.
Huggins said: ‘This business is making annualised operating losses of £15 million. Shareholders will want to see that loss significantly reduce in the year ahead.
‘The acquisition of Autorama is part of Auto Trader's transformation from an advertising platform where consumers go to research used cars, to a fully online marketplace where consumers can go to transact.’
Other than that, Huggins adds: ‘Auto Trader's core marketplace has once again enjoyed an excellent year, delivering double-digit profit growth even against the backdrop of supply chain challenges in both the used and new car market.’
CEO UPBEAT
However, Auto Trader reported a 9% rise in core marketplace business to £473 million compared to £432.7 million last year, Nathan Coe, CEO remains upbeat for the rest of the year.
Coe said: ‘We expect another good year of retailer revenue growth, by far the largest part of our Auto Trader business. This will come from a similar Average Revenue Per Retailer (ARPR) growth rate to that achieved in financial year 2023.
‘We anticipate a slight decline in retailer numbers, mostly due to the full year impact of the disposal of Webzone Limited. The other revenue areas within the main Auto Trader business are likely to perform within a range of flat to low single digit growth.’
SHAREHOLDER RETURNS
The company returned £225 million to shareholders for the year compared to £237.1 million in the 2022 financial year, through £147.3 million of share buybacks and dividends paid of £77.7 million.
It has proposed a final dividend of 5.6p per share giving total dividends of 8.4p per share for the year.
The dividend increase takes into consideration ‘the transition to a significantly higher corporation tax rate from April 2023,’ the company said.
MANAGEMENT CHANGES
The company also announced changes to its board. Matt Davies will be appointed to the board as non-executive director; chair designate and as a member of the nomination committee.
The appointment is part of the board's long-term succession planning given Ed Williams will come to the end of his third three-year term in 2024.
Davies will join the board with effect from 1 July 2023 and will succeed Ed Williams as chair of the board and nomination committee at the conclusion of the company's annual general meeting on 14 September 2023, subject to shareholder approval.
Davies is currently chair at bakery chain Greggs (GRG), where he was appointed in August 2022. He was previously CEO of Pets at Home (PETS), Halfords (HFD) and Tesco's (TSCO) UK & Ireland operation.
