Turners reports business boom

Group upgrades profit guidance for its fourth consecutive record result.
Posted on 12 February, 2024
Turners reports business boom

Turners Automotive Group has announced an upgrade to its guidance for the 2024 financial year to a net profit before tax of at least $48 million, ahead of the $45.5m achieved in the previous 12-month period. 

With more certainty around the full-year result, the forecast dividend has been increased by nine per cent year-on-year to 25 cents per share – up from guidance of 24c.

The company reports it’s approaching a decade of sustainable dividend growth, with an 11 per cent compound annual dividend growth rate since the 2015 financial year.

New Zealand’s used-car market and the Turners’ business continue to demonstrate “strong resilience despite a broader economy under pressure”, it states in an update to the NZX. “Meanwhile, stabilisation in the official cash rate [OCR] is turning from a headwind into a tailwind for the finance business.”

Update on divisions

When it comes to automotive, Turners Cars in Timaru, pictured, opened in October 2023 and the new Napier branch opened last week. 

“Vehicle margins on owned stock continue to hold up well, and some good progress is being made in the transition of wholesale auction units into retail sales channel,” says the company.

Damaged and end-of-life vehicle volumes, excluding one-off weather events, continue to grow.

With interest margins stabilising, the finance division has seen some small expansion in the past few months. The loan book is growing at a modest pace and arrears are performing well within expected levels. 

“There is still some sensitivity to the OCR track and any reduction in the OCR during 2024 would be positive for bottom-line growth.”

New insurance-policy sales are tracking well and ahead of the 2023 financial year, while claims ratios are described as “stable”. Investment returns continue to improve.

As for credit management, debt-load levels are increasing as is the volume of payment arrangements in place although economic conditions are making payment arrangements more difficult. 

“There is a clear increase in debt load from SME sector as pressure intensifies in parts of the economy.” The group will report its full-year results in late May.