Pendragon share price rises amid strong Q3 result
By Jenny McCall
11:21, 7 October 2021
The stock price for UK car retailer Pendragon soared on Thursday after it reported its quarter three trading update.
The share price for Pendragon increased by 6.57% to 18.65p as the group posted strong quarter three earnings and profit.
Increase guidance
Performance for the car company was strong for the quarter and the group increased its underlying profit before tax guidance for the full year from £55.0m to £60.0m to £70.0m.
Pendragon said it had suffered with the shortfalls in new vehicle supply but that this was mitigated by strong gross profit per units in both its new and used cars. The retailer also said it has made cost and efficiency savings.
Challenges to new car supply
“The level of new vehicle order-take has remained robust throughout the quarter and remains above the same period last year. However, the well-documented challenges to new car supply, combined with lower levels of opening inventory, have resulted in a reduction in the level of vehicle deliveries achieved,” the statement said.
New car registrations, which have been reported by The Society of Motor Manufacturers and Traders, are down by 34.4% year-on-year, with several brands sold by Pendragon being heavily impacted.
“Whilst supply has remained a challenge, new car margins have remained strong as a result of these supply shortages, and have also helped to mitigate the volume shortfall,” the statement said.
Cautious approch
Used car gross profit for the group was ahead of company expectations during the month of September and this was driven by strategic changes to the business, “as well as unprecedented tailwinds in used car margins”.
The group, however, remains cautious about potential disruption from Covid-19 to its local and global supply chains
“The Board continues to believe the Group’s strategy positions it well to respond to the ongoing market uncertainty and to capitalise on any resultant opportunities,” the statement said.
Read more: Car dealer Pendragon ups profit forecast as demand improves
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