Turners first half up 28% in hard market

AUCKLAND: Turners Automotive increased firsthalf net profit 28% and says a strong performance by its insurance business offset a countrywide slowdown in the vehicle retailing sector.

The company also foreshadowed that its fullyear result could be affected if present market conditions persist.

Nevertheless, the company plans to buy back up to 5% of its own shares because directors think the current share price undervalues the company.

The shares closed at $2.72 on Monday and have fallen about 14% in the past 12 months.

Net profit for the six months ended September rose to $12.8 million from $10 million a year earlier.

The latest result also included a $3.4 million gain on the sale of property at Wiri, south of Auckland, which Turners has leased back in line with its strategy of optimising its real estate.

It was struck on a 3% increase in sales to $168.3 million for the six months.

Mr Baker said if October market conditions continued, pretax profit for the full year could be affected by 5% to 10% from the company’s previous guidance of $34 million to $36 million.

The company said its cost of goods sold fell 9% to $65.3 million because it sold more vehicles on consignment through Turners’ auctions and therefore owned less stock.

‘‘The business has shown some resilience through tough market conditions in the first quarter and bounced back strongly in the second quarter,’’ Mr Baker said.

‘‘The diversified revenue streams have really demonstrated their value through the first half of this year. However, market conditions, particularly in the used import car market, remain challenging and pressure is being placed on vehicle margins right across the industry,’’ he said.

Turners will pay a quarterly dividend of 4c per share, taking dividends for the first half to 8c, up from 6c last year. — BusinessDesk