Perth-based Automotive Holdings Group (AHG) has announced a drop in its annual net profit of 38.4 per cent.
The fall was expected and comes as a result of the company’s restructures, as well as one-off costs associated with its refrigerated logistics business.
Profits fell to $55.5 million for the 2016/17 financial year, although revenue was up by 8 per cent, to $6.08 billion. Operating earnings before interest, tax, depreciation and ammortisation were down 4.2 per cent to $216 million.
AHG Managing Director, John McConnell, said in a statement that AHG was now in a stronger position to address the short-term challenges in automotive and take advantage of 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 said.
“FY17 was a challenging year in automotive, given the acknowledged decline in the new vehicle market in Western Australia and the tightening of consumer credit conditions, which impacted on finance and insurance income.
“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.”
VFACTS figures show that new vehicle sales in Western Australia have fallen 22 per cent since their 2012 peak; however, the state provides 23.7 per cent of AHG’s market share, which is a 30 per cent improvement on 2012 numbers.
With the WA economy expected to stabilise, AHG predicts a small improvement in its operating performance in the 2018 financial year.