Auto Trader Group plc (LON:AUTO), the UK’s largest automotive marketplace, has announced half year results for the six months ended 30 September 2022.
Strategic overview
– The performance of our core Auto Trader1 marketplace has strengthened over the last six months, achieving double digit revenue and operating profit growth year-on-year. Our customer numbers and product uptake have exceeded expectations, and our competitive position continues to be strong
– We successfully executed our annual pricing event in April 2022, which included the launch of Retail Essentials, part of our Auto Trader Connect platform. Retail Essentials gives customers access to our most fundamental and powerful data, including our taxonomy, which improves advert quality, pricing decisions and enables stock to be updated on Auto Trader in real-time. We are increasingly using our platform to power our retailers’ businesses, and provide services across the wider automotive ecosystem, which strengthens our core and is a key enabler for digital retailing
– We saw strong levels of product growth driven by further uptake of our prominence products. Prominence includes upsell to our new higher-level advertising packages, our Market Extension product (allowing customers to sell vehicles outside their local area) and our pay-per-click product which appears at the top of the search listings. More customers bought our data products in the period, making use of our real-time pricing data
– We launched a small-scale trial for our Deal Builder journey on Auto Trader which combines the component parts of part-exchange, reservations and finance applications, forming an end-to-end transaction journey. Initial feedback to date has been positive
– In June 2022, we completed the acquisition of Autorama (UK) Limited, one of the UK’s largest marketplaces for leasing new vehicles. Autorama’s online marketplace and fulfilment capabilities will transform Auto Trader’s existing leasing proposition. The acquisition positions the Group to better take advantage of significant disruption taking place within the new car market, particularly the growing penetration of electric vehicles and likely changes to distribution models
Financial results
| £m (unless otherwise specified) | H1 2023 | H1 2022 | Change |
| Auto Trader1 | 238.2 | 215.4 | 11% |
| Autorama | 11.6 | – | – |
| Group revenue | 249.8 | 215.4 | 16% |
| Auto Trader1 | 168.8 | 151.7 | 11% |
| Autorama | (4.0) | – | – |
| Group central costs2 | (15.7) | – | – |
| Group operating profit/(loss) | 149.1 | 151.7 | (2%) |
| Auto Trader | 71% | 70% | 1% |
| Group operating profit margin | 60% | 70% | (10%) |
| Basic earnings per share (pence) | 12.23p | 12.63p | (3%) |
| Interim dividend per share (pence) | 2.8p | 2.7p | 4% |
| Cash generated from operations3 | 164.6 | 169.9 | (3%) |
– Excluding the Autorama deferred consideration charge for the period of £13.8 million, which was included in Group central costs, Group operating profit was up 7% and basic EPS was up 8% on H1 2022
– £82.3 million returned to shareholders (H1 2022: £148.4 million) through £30.6 million of share buy-backs and dividends paid of £51.7 million
Operational results
– Cross platform visits5,6 were down 10% to 67.7 million per month (H1 2022: 74.9 million). Cross platform minutes5,6 were down 14% to 498 million minutes per month on average (H1 2022: 579 million minutes). However, both visits and minutes were up significantly versus pre-pandemic levels (57.5 million and 447 million minutes respectively in H1 2020)
– Our share of cross platform minutes remained strong at over 75%7 (H1 2022: over 75%)
– The average number of retailer forecourts5 in the period was up 2% to 14,161 (H1 2022: 13,892)
– Average Revenue Per Retailer5 (ARPR) per month was up £205 to £2,404 on average per month (H1 2022: £2,199). This was driven by both price and product levers, with the stock lever broadly flat
– Physical car stock5,8 on site was up 1% to 440,000 cars (H1 2022: 436,000) on average, within which our listings product for new cars declined to 22,000 on average (H1 2022: 39,000)
– Number of employees (FTE5) in the Group increased to 1,112 on average during the period (H1 2022: 941), with the acquisition of Autorama contributing 122 of the increase
Cultural KPIs (excluding Autorama)
– Employees that are proud to work at Auto Trader9 remained high at 93% (March 2022: 95%)
– Diverse teams and an inclusive culture are critical to attracting, retaining and maximising the potential of our people and therefore our business:
o Board: We have more women than men on our Board (March 2022: five women and four men) and one ethnically diverse Board member
o Leadership: The percentage of women leaders10 was 40% (March 2022: 38%), and those who are ethnically diverse11 was 5% (March 2022: 6%)
o Organisation: The percentage of employees who are women was at 40%12 (March 2022: 40%), and those who are ethnically diverse11,12 was 15% (March 2022: 14%)
– The majority of our CO2 emissions are Scope 3 emissions attributable to our suppliers and we have been working through their respective carbon reduction plans. This work has influenced the calculation of CO2 emissions for the six month period, as we have adjusted our emissions according to those plans, giving total emissions for the period of 3.8k tonnes of carbon dioxide equivalent13 (FY22 11.7k tonnes). We are aiming to achieve net zero across our entire value chain (Scopes 1, 2 and 3) before 2040, and to halve our carbon emissions before the end of 2030.
Nathan Coe, Chief Executive Officer of Auto Trader, said:
“Our first half results demonstrate the strength of our position with car buyers and the depth of partnership we are building with customers. Achieving this in a period impacted by high levels of economic uncertainty is a credit to both our people and customers, and provides confidence in navigating the rest of the year.
“Longer-term we are well placed to grow as we further develop the core Auto Trader business, extend it to enable car buyers to complete more of their purchase online, and provide the industry-leading data and technology platform for our customers.”
Outlook
The Board has confidence for the second half of the year due to:
– consistent trading throughout October;
– the recurring nature of our revenue and delivering our main growth initiatives in the first half of the year;
– the fact that our financial performance in the first half was achieved despite changing economic circumstances, resulting in lower audience, continued low live stock volumes and weak used car transactions; and
– a belief that Auto Trader margins can be maintained at 70%, despite high inflation, particularly given we have delivered the core components of digital retailing.
As per our previous outlook statement, we still anticipate average retailer forecourts to be marginally down year-on-year. However, we now expect stronger ARPR, with the full year growth rate likely to be slightly above that achieved in H1, with the stock lever flat for the full year. Auto Trader’s operating profit margin for the full year is expected to be in line with financial year 2022. This outlook takes account of the Webzone disposal (see post balance sheet events). Autorama is likely to make an operating loss of c.£11m for the full year, with continued supply challenges across all vehicle types resulting in lower delivery volumes. Group central costs will be c.£45m, largely made up of the Autorama deferred consideration.
The outlook for future years is necessarily more uncertain, however the used car market is far less cyclical than the new car market and new car registrations are expected to recover, currently being at their lowest level in 30 years. We believe that there are significant opportunities for Auto Trader to grow revenue at high margins through our price and product levers and will continue to bring more of the car buying journey online through Deal Builder and Autorama. We will be disciplined on priorities, costs and capital allocation ensuring we continue to manage the business responsibly.
Analyst presentation
A presentation for analysts will be held via audio webcast and conference call at 9.30am, Thursday 10 November 2022. Details below:
Audio webcast: https://edge.media-server.com/mmc/p/yy63s5fq
Conference call registration: https://register.vevent.com/register/BI008115ae4d664356a7cedbf4c0651a85
Please note: Questions will only be taken from the conference call line. Please use the above conference call registration link to access the relevant dial-in number and your personal PIN. Please do not share your passcode with others as only one person can use this PIN at a time. Participants on the conference call who also plan on following the slides via the webcast should switch the webcast to Phone mode using the cogwheel icon located on the bottom right corner of the webcast screen to ensure the slides are synced to the phone audio rather than the webcast audio.
1. Auto Trader includes the results of Auto Trader, AutoConvert & Carzone in respect of online classified advertising of motor vehicles and other related products and services in the digital automotive marketplace including the Dealer Auction joint venture.
2. Group central costs which are not allocated within either of the segment operating profit/(loss) comprise a £13.8 million charge for the expense of group shares expected to be issued to settle the Autorama deferred consideration and a £1.9 million amortisation expense relating to the fair value of intangible assets acquired in the Group’s business combination of Autorama.
3. Cash generated from operations is defined as net cash generated from operating activities, before corporation tax paid.
4. Net bank debt/(cash) represents gross bank debt before amortised debt costs less cash and does not include amounts relating to leases
5. Average during the period.
6. Measured by Snowplow.
7. Share of minutes is a custom metric based on Comscore minutes and is calculated by dividing Auto Trader’s total minutes volume by the entire custom-defined competitive set’s total minutes volume. The custom-defined list includes: Auto Trader, Gumtree motors, Pistonheads, Motors.co.uk, eBay Motors & CarGurus.
8. Physical car stock advertised on autotrader.co.uk.
9. Based on a survey to all Auto Trader employees in October 2022 asking our people to rate the statement “I am proud to work for Auto Trader?”. Answers are given on a five-point scale from strongly disagree to strongly agree.
10. We define leaders as those who are on our Operational Leadership Team (‘OLT’), one divisional leader and their direct reports.
11. Throughout 2022 we have asked our employees to voluntarily disclose their ethnicity, at the period end we had 89 employees (9%) who had not yet disclosed.
12. We calculate all our diversity percentages using total group headcount excluding Autorama (September 2022: 1,032, March 2022: 1,002) as at 30th September. At the period end, we had 412 employees who were women, 615 employees who were men and 5 who were non-binary.
13. The total amount of CO2 emissions includes Scope 1, 2 and 3. From the 15 different emission categories that fall within Scope 3, the following have been identified as relevant to Auto Trader: Purchased goods and services (an Environmentally Extended Input Output (EEIO) database methodology was used to calculate the GHG footprint across total spend for the financial year); Capital goods; Fuel and energy related activities (not included in Scope 1 and Scope 2); Waste generated in operations; Business travel; Employee commuting and Investments.
