Auto Trader full-year profits speed up

● Pre-tax profit jumps a tenth amid continued tough market conditions

It was revealed earlier this week that demand for new cars in the UK saw its second consecutive month of growth in May, reaching 3.4 per cent, but in the year to date, the overall market remained down, with new registrations falling by 6.8 per cent.

Numis analyst Paul Richards said: “We believe the group continues to execute flawlessly on building value in the core areas of its business over which it has control.”

Steve Clayton, manager of the HL Select UK Growth Shares fund, which holds a 3.2 per cent position in the stock, said: “All in all, there should be more for the bulls than the bears in these numbers.”

But he warned that Auto Trader “must be wary of ending up on the wrong side of M&A, for the combination of a low rating and strong cash generation leaves them looking an attractive target and the recent bid for Zoopla owner ZPG shows the attraction of digital listings businesses”.

Meanwhile, losses at Onthemarket deepened in the year to January as revenue fell and it booked increased costs. The online property portal’s pretax loss widened to £12.1m from £2.5m. Revenue fell to £16m from £17.8m but the firm said it was encouraged by a sharp increase in site visits in the new financial year.