Eagers Automotive shares slide as inflation weighs on profit
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The news: Shares in Eagers Automotive have tumbled after the car dealer group reported a fall in first-half profit weighed down by inflationary pressures.
The numbers: Eagers shares shed 2.3% to trade at $10.57 by 2:45pm AEST.
The company reported underlying operating profit before tax for the first half of the financial year of $182.5 million, down 12% year on year, though slightly ahead of its updated guidance issued in May which anticipated a 15% fall.
First-half revenue of $5.5 billion was up 13.4% year on year, in line with consensus forecasts.
Eagers declared an interim dividend of 24 cents per share, consistent with the payout a year earlier.
The context: The country’s biggest car dealer group noted that the RBA's monetary policy measures are helping to reduce discretionary spending in the retail sector, driving a shift to more value-conscious buying.
Eagers' CEO Keith Thornton said that overall demand has remained stable, while the impact of high interest rates and inflationary pressures continue to weigh on the overall result.
What they said: "The second half will continue to present challenging conditions as the company navigates external cost pressures, [original equipment manufacturer] levels and lower consumer confidence," Thornton said.
"Despite this, we are well positioned for upside in key parts of our business including our growing retail joint venture, Australia's largest pre-owned retail businesses easyauto123 and improving performance from acquisitions," he said.
The sources: ASX announcement, Citi research
