2 Cheap profits to top $5m
2 Cheap Cars Group has increased its net profit after tax (NPAT) guidance for the current financial year to between $5.2 million and $5.7m thanks to strong trading since the start of April.
The announcement to the NZX on September 8 is up from the $4.2m to $5m guidance the company previously issued in July.
It says the upgrade is the result of a focus on achieving better gross margin, successfully addressing shipping constraints and improved performance at the processing hub in the first five months of the 2024 financial year.
2 Cheap Cars anticipates its unaudited revenue for the five months between April and the end of August will be circa $34.1m, which is up one per cent from the same period a year ago.
Other figures for the five-month spell include gross margin of $8.1m, up 32 per cent year-on-year, and NPAT of about $2.4m climbing from $700,000.
The company notes in its market update that strong trading in the year-to-date has been supported by efforts to increase inventory together with commencing compliance activity at its processing hub.
“The establishment of additional shipping arrangements has resulted in sustained healthy levels of inventory, while insourcing of some compliance activity has delivered both a cost upside and strengthened ability to replenish stock more quickly,” it adds.
It explains its higher NPAT guidance assumes continued currency stability and an unchanged regulatory environment. The total also compares favourably to the $1.3m achieved in the previous financial year.
Paul Millward, pictured, chief executive officer, says restoring profitability and shareholder value at 2 Cheap Cars has progressed more quickly than expected.
“We are very focused on gross margin delivery, and together with strengthening our people capability and successfully navigating supply chain pressures, 2 Cheap Cars Group is in great shape,” he continues.
“The leadership team is working well together to deliver, and the brand is particularly well positioned for the current economic conditions that exist in New Zealand.”
