Auto Trader Group plc another strong year of revenue

Posted by: Giles Arbor 6th June 2019

Auto Trader Group plc (LON: AUTO), the UK’s largest digital automotive marketplace, announced today its full year results for the year ended 31 March 2019.

Financial highlights*

Revenue up 8% to £355.1 million (2018: £330.1 million)
Operating profit up 10% to £243.7 million (2018 restated: £221.3 million) with Operating profit margin increasing to 69% (2018 restated: 67%)
Profit before tax up 15% to £242.2 million (2018 restated: £210.7 million); including £8.7 million profit recognised on disposal of Smart Buying to our joint venture with Cox Automotive
Basic EPS up 18% to 21.00p per share (2018 restated: 17.74p)
Cash generated from operations1 up 13% to £258.5 million (2018 restated: £228.4 million)
£151.1 million returned to shareholders through £93.5 million of share buy-backs (2018: £96.2 million) plus dividends paid of £57.6 million (2018: £52.2 million)
Gross external bank debt2 down to £313.0 million (2018: £343.0 million) with leverage3 at 1.2x (2018: 1.5x)
Proposed final dividend of 4.6 pence per share (2018: 4.0 pence per share) totalling 6.7 pence per share (2018: 5.9 pence per share)

*Certain prior year comparatives have been restated following the implementation of IFRS 16 ‘Leases’ from 1 April 2018 using the fully retrospective approach.

Operational highlights

Average Revenue Per Retailer forecourt4 (‘ARPR’) per month up 9% or £149 to £1,844 (2018: £1,695), with growth from product and price offsetting the expected reduction from stock
Physical car stock on site4,5 up 2% to 461,000 cars (2018: 453,000). Retailer forecourts were stable4, increasing slightly to 13,240 (2018: 13,213)
Audience engagement remains strong. Cross platform visits4,6 per month increased by 1% to 49.1 million (2018: 48.7 million) and our share of time spent by consumers on automotive platforms4,7 increased slightly to 76%, growing to almost 5x larger than our nearest competitor. Full page advert views per month4,8 decreased 3% to 239 million (2018: 246 million)

Strategic highlights

Physical new car stock on site, currently listed on a free trial basis, reached over 30,000 by the year end with increasing engagement from consumers looking to acquire a new car at competitive prices
Stock penetration of our Advanced and Premium packages reached 19% (2018: 12%) as retailers see the benefits of paying more to appear with a greater level of prominence on our marketplace9
Monetisation of our Dealer Finance product achieved 70% penetration amongst eligible retailers. Over 5,000 retailers are paying to advertise their own finance offers with another 3,500 opting to show finance deals from our finance partner on their adverts
Relaunched our Managing products, including a substantial upgrade to Retail Accelerator (formerly i-Control), our most comprehensive tool. The year ended with 3,200 retailers purchasing one of our Managing products
Formed a joint venture with Cox Automotive called Dealer Auction. The new business provides a platform enabling vehicles to be bought and sold in the B2B market, through offering lower transaction costs and market-leading analytics powered by Auto Trader

Trevor Mather, Chief Executive Officer of Auto Trader Group plc, said:

“We have achieved another strong year of revenue and profit growth driven by a line-up of products that are proven to improve the business performance of our retailer and manufacturer customers.
“We remain the most trusted marketplace for car buyers and offer the largest choice of both new and used cars following the recent addition of brand-new cars on Auto Trader, which are available immediately and at competitive prices.
“The new financial year has started well, and despite the continued wider market uncertainty, the Board is confident of meeting its growth expectations for the year.”

Outlook

The financial year has started well with the success of our annual pricing event and the launch of a new Vehicle Check product for independent retailers.

We expect another strong year of ARPR growth. This will be underpinned by our product lever, albeit the growth in product is not likely to reach the exceptional levels seen in 2019. The price lever will be broadly consistent and the stock lever is likely to be slightly down in line with market trends.

We anticipate average retailer forecourts to be flat year on year.

Consumer services improved in the second half of last year which we expect to continue.

Due to the challenges facing Manufacturers and their agencies, we expect revenue from these customers to decline in the first half of the year.

We do not foresee any issues with Brexit affecting our ability to provide our services, or to materially change our cost base.

We anticipate total operating costs for the year to increase at a rate of low to mid-single digit.

The Board is confident of meeting its growth expectations for the year.