Macklin owner gets profits revved up

● Solid used car market and strong after-sales help offset new car dip

Revenues in the first half dipped 0.6 per cent to £1.45 billion. While there was a double-digit decline in like-forlike new car retail volumes, used vehicle volumes held up and the after-sales business performed strongly.

Forrester highlighted a reduction in operating expenses while shareholders will benefit from a 10 per cent hike in the interim dividend to 0.55p. The group is also continuing with a share buyback programme.

The chief executive played down concerns from some quarters that a bubble might be building within the car financing sector, particularly personal contract purchase (PCP) plans that involve a final balloon payment.

“The default rate is very low and finance companies have been very prudent in terms of their lending criteria,” he stressed.

Brokerage Canaccord reiterated its “buy” recommendation on the shares but said it was taking a “more cautious view” on the road ahead, given “sterling weakness, volatile demand and the prospect of interest rate rises”.

Zeus Capital analyst Mike Allen noted: “We maintain our Full Year [FY] 2018 assumptions at this juncture but take a more conservative view in FY 2019 and FY 2020.”