Automotive Holdings Group’s net profit has taken a tumble, dropping 38% to $55 million for the year ending June.
However, the result comes as no surprise after the company issued a warning about the situation during a trading update in May.
Overall revenue was up to $6.08 billion from $5.63 billion the previous year.
One‐off costs like the transformation of its refrigerated logistics business and restructuring of the company’s operations are being put forward as reasons for the decline in profit.
Changes in consumer credit rules have also impacted insurance and finance income, AHG managing director John McConnell says.
The company was now in a stronger position to address the short term challenges in automotive and take advantage of the opportunities for further industry consolidation.
“It is pleasing that the performance of our dealerships in New Zealand and the eastern states of Australia was strong,” he says.
“We have commenced the restructuring of the automotive division and implemented a number of cost reduction initiatives that will mitigate anticipated insurance commission changes in FY2018.”
It is also rolling out the easyauto123 fixed‐price used car warehouse model in conjunction with our acquisition in July of a majority stake in the Carlins auction and wholesale business.
“The easyauto123 model is resonating with customers without affecting used car sales at our franchised dealerships,” says McConnell.
The company’s other logistics division, which includes the AMCAP parts distribution business and the importation and distribution of KTM and Husqvarna motorcycles, performed ahead of FY2016.
The outlook for the next year is cautiously optimistic, McConnell says.
Expectations are that the Western Australian economy will improve, while its cost reduction programs will take effect.
The anticipated uplift is expected to mitigate the impact of regulatory changes to FY2018 insurance income in the automotive division.
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