Colonial surges to record profit
Colonial Motor Company has smashed its trading profit after tax record after hitting $33.35 million in the year to the end of June 30, 2022, which was up 19 per cent from its previous high of $27.92m a year earlier.
Ash Waugh, chairman, says trading conditions over the first six months of the financial year were “very strong, with all of our trading operations delivering outstanding results”.
He adds the government’s feebate scheme, or “clean vehicle tax”, that came into effect on April 1 created an incentive for customers to purchase before that date. This was particularly evident in the light commercial segment where virtually all vehicles now incur a penalty.
Waugh explains in a preliminary result announcement to the NZX that a more challenging final quarter than the previous three was not unexpected, “with a gloomy economic outlook and continued supply constraints post March combining to slow our car operations”.
Registrations of new and used vehicles for the seven months to July this year had softened across the Colonial group relative to the same period of 2021 and were down seven per cent and two per cent, respectively.
Waugh, pictured, describes March as a registration anomaly, with activity driven by the clean car discount. In the four months since March, new vehicle registrations have been down 20 per cent and used 37 per cent compared with a year ago.
“We anticipate the industry will recover to a degree but a softer trajectory will likely be maintained over the medium term.
“Supply, particularly for electric vehicles, remains constrained due to both global availability of raw materials and manufacturing capacity,” says Waugh.
“This will mean an element of erratic local supply and continued longer than normal lead times for desirable product.”
He adds that high fuel prices and other inflationary pressures are taking their toll on consumer confidence and Colonial will not be immune from these effects.
“We have confidence in the next-generation products arriving in-market over the coming year and together with a steady demand for tractors and heavy trucks, these factors should allow us to remain competitive in all the segments we trade in.”
The company notes its truck and tractor dealerships have maintained continued momentum and, collectively, have delivered “exceptional” total revenue just over $1 billion”.
On the property front, Colonial reports major refurbishments to Avon City Ford in Christchurch, Timaru Motors and Dunedin City Motors are well under way.
“We continue to be impacted by rising building costs, supply shortages and labour constraints in the construction sector,” adds Waugh. “This has slowed a number of projects and required the deferment of others.”
The company has also purchased a property on Ti Rakau Drive in Botany to support its brand representation in the East Auckland region.
Colonial’s directors have declared a fully imputed dividend of 47 cents per share (cps) to be paid October 3, 2022, which will take the total dividend for the year to a record 62cps.
