Turners Group lifts first half profit 5.9% as cheap imports attract customers

Turners Group NZ chairman Michael Dossor
Dorchester Pacific chief executive Paul Byrnes
Turners Group NZ (Turners Auctions) 12-month price history (NZX.com)

Turners Group NZ [NZX: TUA], which this month changed its name from Turners Auctions, lifted first-half profit 5.9 percent as a strong New Zealand dollar lowered the cost of imported cars, helping attract customers with cheaper prices, and the company anticipates good trading conditions for the rest of the year.

Net profit rose to $2.27 million, or 8.3 cents per share, in the six months ended June 30, from $2.14 million, or 7.8 cents, a year earlier, the Auckland-based company said in a statement. Revenue climbed 19 percent to $49.6 million, and Turners expects sales to increase in the second half of the year. It forecasts annual profit to rise 5 percent to 10 percent from the $4.8 million it reported in 2013.

"Market conditions are moving in favour of customers purchasing used vehicles with a strong New Zealand dollar, heavy discounting on new cars and an influx of imports from Japan leading to a surge in supply," the company said. "This is having a positive flow on effect for Turners and we expect good trading conditions for the second half of our financial year."

Last month Turners' shareholder Dorchester Pacific [NZX: DPC] launched a takeover bid for at least half of the company, offering $3 a share in cash, shares and notes, valuing it at $82 million. Dorchester already has support from Turners' chairman and biggest shareholder Michael Dossor.

Turners' board today declared an interim dividend of 7.5 cents per share, payable on Sept. 25 with a record date of Sept. 18. That's up from 7 cents a year earlier.

The company's rose 1.6 percent to $3.10, and have gained 25 percent this year.

Turners' auctions segment reported a 5 percent decline in sales to $17 million, with operating profit falling to $821,000 from $1.1 million a year earlier. Its fleet unit, where vehicles are purchased and on-sold by Turners, boosted revenue 36 percent to $28.8 million, and lifted earnings to $1.2 million from $981,000, and the finance division increased revenue 41 percent to $3.8 million, with operating profit up to $1.2 million from $907,000.

The company plans to expand its Christchurch operations to meet increased demand, and will set up a separate site for damaged vehicle storage, trucks, and machinery sales, it said.

(BusinessDesk)

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