Turners Auctions half year profit up 69 percent

Media Release

21 August 2009

Turners Auctions half year profit up 69 percent

Turners Auctions today announced its half year net profit after tax of $1.4 million, up 69 percent on the same period last year.

Group net profit after tax $1.4 million, up 69 percent
Net cash inflows from operating activities $5.3 million, up 76 percent
Interim dividend payment 5 cents per share

Turners says this is an extremely pleasing result given the backdrop of a New Zealand vehicle market that has been in turmoil as a result of the recession.

“It has been an extraordinarily tough year for the new and used vehicle industry in New Zealand so we are delighted with this result,” says Graham Roberts, Turners Auctions Chief Executive Officer.

The Group’s positive first half result has been driven by tight cost control combined with some quite deliberate changes in business strategy. Turners has reduced expenses by 19 percent compared to the first half of 2008. The biggest contributors to the cost reduction have been reduced vehicle imports by Turners Fleet and a shift to an online marketing strategy focusing on online classified websites.

“The investments made in our brand during 2008, combined with the new Turners website and partnerships with other online classified sites, has delivered the business 18 percent more registered bidders than the same time last year for approximately $1 million less spend,” says Mr Roberts. 

New Zealand’s used and new vehicle markets were hit particularly hard as the recession took hold through 2009. The total New Zealand used vehicle market is down 9.4 percent year to date compared to 2008 sales. Sales of used Japanese imports were down 40 percent for the half year.

Despite the decline in the used vehicle market, auction revenues have held up well, dropping just 3 percent against 2008 comparative numbers.

Turners Fleet gross profit has been maintained at the same level as the prior year, even though unit sales were down 35 percent on 2008.

“There are some positive signals for the revenue lines,” says Mr Roberts. “Our market share has increased steadily over the first half of 2009. Core sources of vehicles remain strong with repossession units from finance companies up 31 percent over the corresponding period and lease company volumes up 25 percent. Receivership and liquidation work is strong, reflecting the economic situation.”

Turners Auctions’ balance sheet remains very strong positioning the company well for the future. Net cash inflows from operating activities have grown by 76 percent to $5.3 million compared to $3 million in 2008.

With the reduction in the cost base, growing market share, key customers retained and a New Zealand used vehicle market that is showing early indications of recovery, the company is forecasting a full year net profit after tax in the range of $2.6 million to $2.8 million.

The positive first half result and Turners’ strong cash position have led the Directors to declare a fully imputed net dividend of 5 cents per share, payable on September 17, 2009.

- Ends –

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