SALES PASS £500M AT AUTO TRADER BUT CAR SUPPLY SHORTAGES HITS PROFITS

Auto Trader's sales have passed £500m despite the "challenging economic backdrop" but car supply shortages has seen it report lower annual earnings.

The Manchester-headquartered company has reported a revenue of £500.2m for the 12 months to March 31, 2023, up from the £432.7m it posted for the prior year. Its pre-tax profits dipped from £301m to £293.6m over the same period.

The group said soaring demand saw cars sell faster than at any time since its flotation eight years ago, which held back the number of vehicles listed on Auto Trader.

The car market was affected by ongoing severe supply woes amid the global semiconductor shortage, which saw the group’s listings for new cars drop to 25,000 on average from 29,000 the previous year.

Used car stock increased 3% over the year, but was still 35,000 cars lower than pre-pandemic levels, with the new car supply issues leading to a jump in demand for used vehicles.

The group’s operating profits dropped 9% to £277.6m, dragged lower by its recently acquired loss-making vehicle leasing business Autorama, which saw operating losses of £11.2m. But the Auto Trader arm notched up a 10% rise in operating profits.

Auto Trader has also announced that Matt Davies is to succeed Ed Williams as chairman in September.

Mr Davies has previously been chief executive of Pets at Home, Halford and Tesco. He is currently chairman of Greggs and formally held that role at N Brown, Hobbycraft and Travel Counsellors.

Chief executive Nathan Coe said: "This year marks another strong financial and operational performance for Auto Trader.

"Given the challenging economic backdrop and historically low levels of vehicle supply, these results are a credit to our people and the close partnerships we've developed with our customers.

"The prospects for our marketplace are as strong as they have ever been, underpinned by the significant number of car buyers and retailers using Auto Trader.

"We have also made good progress on improving the new and used car buying experience by moving more of the journey online, on Auto Trader.

"As a result, despite continued economic uncertainty and automotive industry changes we feel confident about the year ahead."

During the year the average number of employees increased from 960 to 1,160.

On its outlook, the group said: "The new financial year has started well and the board is therefore confident of meeting its growth expectations for the year.

"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 ARPR growth rate to that achieved in financial year 2023.

"We expect the product lever to be consistent with the £137 achieved last year and the price lever to be slightly higher than last year's £90. The stock lever is likely to remain flat.

"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.

"Over time we aim to grow share in the new car leasing market through our new Autorama segment.

"Our short-term focus is on significantly reducing the current annualised operating losses of £15m through deeper integration with Auto Trader and being disciplined on costs.

"Group central costs, which are non-cash and relate to the acquisition of Autorama, will be c.£18m for the year.

"Auto Trader operating profit margins should be consistent year-on-year at 70%, despite continued investment in product development and inflationary pressures. Group margins are expected to increase year-on-year.

Our capital policy remains unchanged, with the majority of surplus cash generated by the business being returned to shareholders through dividends and share buybacks."

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2023-06-01T07:41:53Z dg43tfdfdgfd