September 29, 2023

Autosports Group (ASX:ASG) chief govt Nick Pagent has informed shareholders within the listed firm’s annual report that its company technique stays focussed on the luxurious market and it’s poised for additional progress within the 2024 monetary 12 months (FY24).

Aftersales progress, new enterprise acquisitions and lowered international provide constraints resulted in a document turnover of $2.371m for ASG for the monetary 12 months ended June 30, 2023 (FY23) and an total enchancment in gross margin to twenty.1%.

The corporate says enhancements in effectivity via scale and value management afforded a discount in operational expenditure to 11.7% leading to a document EBITDA margin of 8.4% and a NPBT ratio of 4.9%, up 0.3% on FY22. 

It completed FY23 with a money steadiness of $42m and web debt of $181m, backed by property property with a carrying worth of $194m.

Pagent says the ASG technique is to excel in representing the world’s nice automotive luxurious and status manufacturers, from prime areas throughout Australia and New Zealand. 

“It has allowed us to construct a ability set and market place that offers us a aggressive benefit in Australia and New Zealand. It additionally means we now have declined acquisition alternatives for manufacturers that don’t align with that,” Pagent says. 

“As the longer term appears to be like tougher within the 12 months forward, I’m assured our resolution to focus on the luxurious finish of the market will likely be rewarded.

Pagent says the brand new car market remained robust, with registrations up 8.2% within the six months to June 2023 per Vfacts, nonetheless the luxurious and status markets had been stronger outperforming the broader market with 27.3% progress in the identical interval. 

“We noticed normalising of world provide chains which allowed us to develop our new car income by 25.9% in FY2023,” Pagent says. 

“We had been capable of obtain this progress while rising our ahead buyer order financial institution volumes, income and gross income in comparison with final 12 months. Luxurious demand remained resilient with like-for-like progress in new buyer orders in FY2023.

“Electrical automobiles gathered momentum out there. Within the month of June 2023, we noticed a brand new excessive with alternate powertrains (Plug-in Hybrid, Hybrid and full Electrical) representing 23.2% of the passenger and SUV market. 

“Whereas the EV area has been probably the most dynamic a part of the trade together with a number of new gamers, boundaries to entry to the luxurious area stay excessive. That is additional proof that our luxury- targeted company technique is true for Autosports Group.

“The used car market continued to be a dynamic area with costs extra reflective of their pre-Covid valuations; consequently, margins stabilised and our technique of specializing in the bottom value of acquisition and most effective gross sales channel improved used automotive income by 22.4%.

“Our robust service and elements progress was pushed by two key components. Firstly, the elevated quantity of recent automobiles delivered within the post-Covid period help trailing revenue streams in service, elements and panel.

“Secondly, the rising penetration of service plan contracts help buyer retention charges and supply extra predictable income streams. These components enable for progress alternatives within the highest margin components of our enterprise and supply a basis to climate turbulence that have an effect on front-end gross sales.

“In FY23 we opened the greenfield web site at Ringwood BMW and launched Melbourne BMW with elevated service capability. We additionally invested at Brighton Jaguar Land Rover, Ducati Sydney, our Bespoke by Autosports enterprise and Volvo websites in Sydney to assist meet the rising wants of our present buyer base.

“The sturdy cashflows of the enterprise allowed us to broaden into the New Zealand market this 12 months by buying two BMW and two MINI dealerships in Auckland, and the one Rolls-Royce dealership in New Zealand. These companies gave us speedy scale within the market and are working in step with our expectations.

“We had been additionally happy so as to add the Motorline and Gold Coast BMW and MINI dealerships to our portfolio in February, deepening our relationship with BMW Group and increasingour scale and geographic protection via aligned strategic progress.

“As this acquisition settled mid-year in FY23, we are going to see a full 12 months of turnover and revenue on this subsequent interval.

“We’ve additionally strengthened the steadiness sheet by buying our present retail location in Fortitude Valley. This brings the carrying worth of our actual property portfolio to past $194m.

Importantly our robust cashflows, steadiness sheet power and supportive OEM finance companions go away the enterprise well-placed to proceed our progress technique.

“We count on FY24 will current extra challenges than the previous 12 months, nonetheless, our order banks are at close to document ranges.

“The luxurious shopper stays resilient with enquiry and order charges remaining secure even because the broader financial system slows. Mixed with a full-year biking of acquisitions made within the prior 12 months, Autosports is positioned to ship continued income progress via FY24.

“The prevailing surroundings creates alternative for acquisition-led progress. Autosports Group’s scale, working money flows and luxurious acquisition runway go away us well-positioned to progress our progress technique in FY24,” he says.