Auto Trader Group plc (LON:AUTO), the UK’s largest digital automotive marketplace, announced today half year results for the six months ended 30 September 2018.
Financial highlights
– Revenue up 7% to £176.8 million (H1 2018: £165.0 million)
– Average Revenue Per Retailer forecourt (‘ARPR’) per month2 up £152 to £1,826 (H1 2018: £1,674), driven by product and price growth
– Operating profit up 10% to £120.6 million (H1 2018 restated: £109.9 million) resulting in Operating profit margin of 68% (H1 2018 restated: 67%)
– Profit before tax up 9% to £114.5 million (H1 2018 restated: £105.3 million)
– Basic EPS up 12% to 9.78p per share (H1 2018 restated: 8.71p)
– Cash generated from operations3 up 12% to £129.0 million (H1 2018 restated: £115.1 million)
– Net external debt4 down to £319.4 million (March 2018: £338.7 million) with leverage5 at 1.31x (March 2018: 1.46x)
– Returned £80.8 million to shareholders through £42.9 million of share buy-backs (H1 2018: £36.3 million) and dividends paid of £37.9 million (H1 2018: £34.0 million)
– Interim dividend of 2.1p per share (H1 2018: 1.9p per share)
The Group adopted the new accounting standard for Leases (‘IFRS 16’) from 1 April 2018 using the fully retrospective approach. The comparative period ended 30 September 2017 has therefore been restated.
Operational highlights
– Record growth from both new and existing retailer products. We successfully monetised our Dealer Finance product in April, along with increasing penetration of Advanced and Premium packages and ‘Managing’ products
– Our new car advertising proposition, and in particular our InSearch product is gaining traction following its launch last year. In what has been a tough market, InSearch has attracted incremental spend from manufacturers and their agencies, due to its ability to offer a highly targeted way to influence in-market car buyers at scale
– As predicted, physical car stock6 on site is down 3% to 437,000 cars (H1 2018: 451,000). Retailer forecourts2 were stable at an average of 13,153 (H1 2018: 13,213)
– Cross platform visits7 were nearly four times larger than that of our nearest competitor (H1 2018: 3x larger). Full page advert views increased 1% to 247 million per month2,8 (H1 2018: 245 million). Users spent an average of 585 million minutes a month2,7 on our marketplace, which whilst a 2% decrease on prior year (H1 2018: 594 million) actually represented an increase in market share
– In August the Group entered into a joint venture agreement with Cox Automotive UK Limited to provide an innovative digital marketplace for wholesale vehicles, which is currently subject to approval from the Competition and Markets Authority
Trevor Mather, Chief Executive Officer of Auto Trader Group plc, said:
“We have had a great first half of the year driven by strong adoption of new products and advertising packages by both retailers and manufacturers.
“We strengthened our market leading position with our audience of car buyers, by continuing to focus on providing the best car buying and selling experience in the UK. We do this by providing the best choice of cars, free valuations, extensive reviews and most recently showing finance options, so that car buyers can understand the monthly cost of owning their next vehicle.
“Despite a more challenging automotive market, we see many examples of our customers achieving strong results in their used car businesses by using Auto Trader services which help them to select, price and most effectively advertise their vehicles.”
Outlook
The strong first half means revenue growth for the full year is likely to exceed previous guidance.
ARPR growth to date has outperformed our expectations despite the anticipated stock headwind. Product will continue to be the largest contributor to growth in ARPR, with growth for the full year lower than that of the first half due to a strong second half comparative.
We expect retailer forecourt numbers to remain broadly stable.
Manufacturer & Agency has performed significantly ahead of our expectations helped by the strong uptake of InSearch, our new car advertising proposition. We expect growth to be tempered in the second half due to the broader uncertainties facing manufacturers.
Consumer services growth is expected to improve slightly, partly as a result of being compared to a relatively weak second half last year.
We continue to anticipate our total operating costs for the year to increase at a rate of low to mid-single digit.
The form of any Brexit deal is likely to affect Auto Trader only as much as it impacts on both general levels of consumer confidence and the supply of new cars into the UK market. We do not foresee any issues with Brexit affecting our ability to provide our services, or to materially change our cost base.
The Board remains confident of delivering its growth expectations for the remainder of the year.
