‘Resilience’ key to success

Turners Automotive Group anticipates continued “strong progress” over the next 12 months towards its medium-term goal of $65 million in net profit after tax (NPAT) even though the economic recovery is expected to be gradual.

The company says it will continue to benefit from the tailwind of reducing interest rates as will the Kiwi economy, which will translate into more robust demand for cars.

It also expects to see material benefits from its new branches in Christchurch and other branch expansion plans. 

“Ongoing market-share gains and branch rollout for automotive, supportive conditions and continued efficiency gains for our annuity businesses, and increasing operating leverage across the group, provide a solid foundation for continued profit growth,” it says in a statement to the NZX issued on May 26.

The company’s growth model up to the 2028 financial year is to be underpinned by five key areas. In automotive retail, that’s branch expansion and continued investment in the brand, as well as retail optimisation by transitioning unit sales from wholesale auctions to retail.

In finance, the aim is to grow premium lending as the economic cycle eases and interest costs start to reduce, while in insurance, expanding market share and direct-to-consumer distribution opportunities are highlighted. Credit management will be expanded by rebuilding its payment bank as debt load increases. 

Record results

Turners says it has further strengthened its track record of resilience by delivering record profit and dividend for the 12 months to March 31, 2025. 

The result caps off a decade of sustainable growth with its dividends increasing almost threefold from 10 cents per share in financial year 2015 to 29 cents in 2024/25. The result demonstrates having a “diversified platform to navigate extremely challenging economic conditions”. 

Revenue during the past fiscal year was $414.2m, down by one per cent, EBIT rose by six per cent to $62.3m, NPBT was $54.3m – up 10 per cent and NPAT was $38.6m for an increase of 17 per cent.

Earnings per share came in at 43.3 cents, up 17 per cent, for a final dividend of nine cents. The full-year dividend was 29 cents per share, up 14 per cent.

Key business highlights

Despite an “extremely challenging” consumer environment and ongoing regulatory changes, Turners describes delivering 10 per cent increase in NPBT to $54.3m for 2024/25 as “robust”.

The financial year had two distinct halves. The first was impacted by economic contraction and depressed demand, which led to reduced vehicle margins. 

In contrast, the second half demonstrated a strong recovery with all four core divisions returning to year-on-year growth. This was driven by improved margins, and significant momentum in finance, insurance and credit management.

This turnaround has enabled Turners to achieve another record performance, reinforcing its ability to navigate market cycles successfully, says Todd Hunter, chief executive officer.

“Our team has worked incredibly hard to ensure that some of the toughest economic conditions we’ve faced didn’t derail our growth strategy,” he adds.

“Auto retail remains our largest division and the pressure it faced in the first half was no small matter. But even in worse conditions than the global financial crisis, we proved demand for used vehicles is resilient.

“Although margins were squeezed for a period, our ability to manage margins during the second-half recovery was pleasing. 

“With auto retail now firmly back in growth mode, we enter financial year 2026 with strong momentum across all segments. We are on track to reach our financial-year 2028 targets earlier than expected.”

Grant Baker, chairman, says: “We’ve always believed that used auto sales are less cyclical than many retail segments and that by deliberately diversifying the business we could create a sustainable, profitable business for our shareholders. 

“With the economic cycle returning to a more positive mode and with our competitive advantages, we are well-positioned with a dedicated team, leading brand, robust balance sheet, and growing physical and digital retail channels. 

“We are confident this platform will continue to generate shareholder value well into the future including for the many team members who are shareholders themselves.” 

Automotive retail revenue and profit was down in 2024/25, but margins and volumes improved in the second half supported by “disciplined pricing, a shift to domestic sourcing and repositioning inventory to lower-priced cars”. 

The finance division achieved strong revenue and profit growth as the interest-rate environment became a tailwind with net-interest margin building. Arrears remained well below market levels, and the loan book continued to expand with improving quality metrics and a “prudent provisioning buffer maintained”. 

Insurance delivered solid revenue and profit growth with momentum building in the digital direct-to-consumer platform. Claims performance was well-managed and policy sales remained resilient despite the challenging environment due to effective risk-based pricing. 

Servicing and repairs are a new business stream, soon to be changed to the Turners brand, with a growing mobile-van network and a focus on cross-selling into customers. Credit management has continued to see debt load building in-line with a tightening economy, particularly with SMEs. 

Developing and maintaining a strong culture remains a key competitive advantage, says the company, with it ranking in the top five per cent of consumer businesses globally using Peakon, an employee engagement tool. It has scored 9.4 out of 10 for diversity and inclusion and 9.1 per cent for health and wellbeing.

The company’s employee share scheme is now three years old with about 53 per cent of staff participating.