18 Jun 2020

Turners pleased with full year result despite pandemic impacts

3:17 pm on 18 June 2020

Vehicle retailer and finance group Turners Automotive has reported a small drop in profit due to a slowdown in sales in the last six weeks of the year because of Covid-19.

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Its profit for the year ended March was down 10 percent on last year's to just over $20 million. Revenue was flat at around $333m.

The company also pointed out that the 2019 earnings had benefited from a $3.4m one-off sale and a lower tax rate.

Prior to the pandemic the company was tracking to beat its previously issued earnings forecast of around $30m.

Chief executive Todd Hunter said considering the sudden blow to revenue during February and March he was pleased with the result and was optimistic about the coming year.

"We are now focused on the opportunities to grow this business. We have been successful in reducing costs through rental relief, government wage subsidies, staff reducing work hours and using annual leave balances, travel and other expenditures," he said.

"The used car market has shown considerable resilience in previous downturns and early indications are supporting this theme. We know customers will be more likely to trade with businesses who have a strong brand and reputation like Turners and we believe this is the time to build market share."

While auto finance profits were down on last year, the company's finance, insurance and credit management businesses held up, including the unexpected bonus of clients paying down debt.

"One thing we didn't expect was the improvement in arrears, so around half the improvement in arrears is due to people making more payments as a result of their discretionary income levels going up over the lockdown."

In April the business saw a 57 percent drop in revenue compared to the year prior, however Mr Hunter said recovery in May had been swift and he was optimistic about the coming year's performance.

"At beginning of lockdown we modelled out three scenarios - worst, likely and best - pleasingly we are thus far tracking above the best case."

"Due to the level of unprecedented uncertainty in the economy it will be difficult to issue guidance for 2021. We will update over coming months with progress, and plan to give guidance once the macro environment plays out more clearly."