Turners Group lifts first-half profit, eyes further acquisitions

Turners Group posted a 15% gain in first-half profit and said all its businesses were expected to lift earnings in the full year.

Profit rose to $8.5 million, or 12.95c a share, in the six months ended September, from $7.4 million, or 11.55c, a year earlier, the Auckland-based company says.

On a pre-tax basis, profit of $11.8 million was ahead of the company's forecast of $11.6 million and previous year’s $10.3 million. Revenue rose 36% to $115.1 million.

Turners has built itself into an integrated automotive financial services group, with businesses spanning automotive retail, finance and insurance. The company said today that all sectors are expected to deliver a year-on-year improvement in operating profit for the full year, with 10% organic growth expected from existing businesses.

"Turners remains focused on growth, both through M&A and by leveraging opportunities within each business," the company says.

In the first half, the automotive retail business lifted operating profit 31% to $6.9 million. The result includes two months' trading from Buy Right Cars, acquired in July 2016. Turners also launched online car purchasing website Cartopia and is expanding its trucks and machinery business, having acquired a further two properties.

"The Buy Right Cars acquisition is settling in well and Tuners will continue to look at acquisitions in the very large automotive retail sector," the company says.

"This sector not only delivers a transactional margin on each sale, it also provides opportunities to cross-sell Turners' automotive finance and insurance products to these customers."

Turners says it is well funded for continuing merger and acquisition activity, having raised $25.56 million from convertible bonds in September, and $13.5 million from a share placement.

The company's finance business increased first-half operating profit 7.2% to $4.9 million as its focus shifts to consumer automotive related lending from commercial lending.

Its Oxford Finance unit lifted operating profit 24 %, offsetting a decline from Dorchester Finance (which Turners was formerly known as), which is moving to higher quality, lower risk consumer lending.

Its insurance unit posted an 81% drop in operating profit to $130,000 even as revenue lifted 21%.  The business was impacted by increases in insurance reserves. The latest earnings don't include any contribution from Autosure Insurance, which settles on December 1, and which Turners says will give it scale and enable it to simplify the insurance business from an underwriting perspective.

Turners' debt collection services increased operating profit 51% to $3.4 million, 97% of which came from New Zealand.

The company will pay a 3 c per share second-quarter dividend on Dec. 23, taking the first-half dividend to 6 c.

Its shares last traded at $3.55 and have gained 18 % this year.

(BusinessDesk)