Turners thriving in uncertainty

Bosses at Turners say the group is well positioned for the “new norm” after seeing the business and earnings grow in recent times.

Executives from the company outlined the state of its various divisions, which cover used car sales, finance, insurance and credit, during an institutional investor morning on April 14.

Todd Hunter, chief executive officer, says changes the company has been working on over the past two to three years are now “delivering market share growth and margin expansion as well as de-risking the business”.

These shifts have focused on four key areas, which are retail optimism, vehicle-purchasing decision making, premium lending and insurance system development.

He notes used cars have demonstrated resilience recently and says the company is a “high-trust brand for uncertain times”.

“Underlying demand is still strong with more cars exiting the fleet,” he adds.

Hunter says all parts of the Turners Group “are well positioned for the new norm” and geographical diversification and diversified sources of supply are factors in the company’s favour.

“[Turners is] resilient and well placed for an uncertain environment,” he told the meeting. “Covid was a stress test, but we exceeded expectations.”

Investors also heard the de-risking strategy for the finance arm of the group is working well and annuity earnings had proved “helpful in lockdown”.

Hunter explains Turners will continue to invest in digital developments, with the group’s IT spend tipped to be more than $8 million in the 2021 financial year, about $2m more than in the previous 12-month period.

Initiatives under way include a customer data platform and a valuation tool for the vehicle retail section of the business. It is also working on application programming interface (API) development for its insurance sector.

Greg Hedgepeth, chief executive of the auto retail division, told the meeting the company sells about 30,000 cars a year, with 90 per cent of those vehicles sourced locally and only 10 per cent are imported.

Over the coming year it plans to expand sites at Rotorua and Nelson, along with buying more local car inventory to maintain its profit margin of about $1,500 per vehicle.

Hedgepeth says it also hopes to improve lead management in marketing and sales conversion rates, claiming a one per cent lift will result in an extra 800 sales each year.

Delivering results

Grant Baker, chairman, says the company has successfully delivered on its growth strategy as “earnings and dividends have grown substantially and predictably”.

He adds the pathway to future improvements include further optimisation in all businesses with margin expansion and market share gains.

There will also be a focus on sustainable dividend growth, considering opportunistic bolt-on acquisitions, and investing further in digital “to press home our advantages of scale”.

Baker reiterated that profits for the 2021 financial year are set to be more than $35 million, up from a previous forecast that was in the range of $33m to $35m.

The meeting also heard about the progress of Oxford Finance, Autosure and DPL Insurance, with digital ventures again identified as vital to expanding those businesses.

James Searle, chief executive of the insurance division, says increasing sales volumes of lower-risk vehicles and further refinement of premium rate for risk are priorities.

Another focus is developing a new self-service system for customers to support sales within its agent network. Development of systems and processes to support the launch of a direct-to-consumer channel proposition are also in its sights.