Turners Auctions beats annual profit forecast; shares rise to highest in more than eight years
Turners Auctions [NZX: TUA], which transacts about 10 percent of the New Zealand used vehicle market, beat its annual profit forecast after widening its scope beyond auction sales, and lifting sales of insurance and finance. The shares surged to the highest in more than eight years.
Net profit rose 14 percent to $4.8 million in calendar 2013, the Auckland-based company said in a statement. That's an improvement from the company's estimate in November for profit to rise about 10 percent. Revenue increased 14 percent to $89.2 million.
Turners new chief executive Todd Hunter, appointed in August, aims to grow the company's market share by trading vehicles through a wider range of outlets, and increasing its finance and insurance offerings. In 2013, revenue from the company's higher-margin fleet division, where vehicles are acquired and on-sold by Turners, surged 30 percent to $46.9 million. Revenue from auctions, where Turners sells on behalf of a customer, fell 1 percent to $36.3 million.
"Our goal is to grow our market share by creating more opportunities to source and sell vehicles," chairman Michael Dossor said.
Shares in Turners jumped 10 percent to $2.59, their highest level since October 2005. The stock was listed in 2002, following an initial public offering at $1.50 apiece.
Turners Auctions, which traces its history back to 1943 when Turners and Growers began auctioning cars and trucks alongside its traditional fruit and produce lines, is sourcing more product through its CashNow service, where it buys vehicles up-front from customers at an agreed price, and is also widening its retail outlets by using auction website Trade Me and its own revamped Turners website. A bigger role in sales allows Turners more opportunity to sell consumer finance and insurance, it said.
"Although we only have only recently started to implement our new multi-channel business model, early indications of its success are encouraging and the potential for growth is considerable," Dossor said.
Finance revenue rose 10 percent to $6 million as more customers bought vehicles using consumer finance provided through Turners' BuyNow service, boosting the company's loan book by 20 percent to $25.6 million.
The company will pay a 9 cent a share final dividend on April 9, up from 8 cents in the year earlier period.