Pendragon, Britain’s biggest car dealer, blamed political and Brexit uncertainty as the company said its annual loss would meet its worst expectations and announced 300 job cuts.
The company slumped to an underlying pretax loss of more than £32m for the six months to the end of June from a profit of more than £28m a year earlier. Including a £102m charge for the reduced value of its business and assets such as property, the first-half loss was £130m compared with a £21m profit the year before.
The loss was mainly caused by Pendragon cutting prices to clear excess stock at its Car Store used vehicle business and falling prices in the wider market. Pendragon, whose other brands are Stratstone and Evans Halshaw, said it would close 22 of 34 Car Store branches and a preparation centre in Stoke with the loss of about 300 jobs.
Pendragon said: “The heightened political and Brexit uncertainty, as to both outcome and timing, is adversely affecting customer confidence. We are not anticipating any improvement in this for the rest of our financial year.”
As a result of these market conditions, group underlying loss before tax for the full-year “is now expected to be at the bottom of the board’s expectations”.
UK car sales have slumped as Brexit turmoil has knocked consumer confidence, causing households to hold back on replacing their cars. Pendragon issued a warning in June that it would suffer a loss this year but said it expected to be profitable in the second half.
The uncertainty for businesses created by the turmoil surrounding Brexit was underlined in a report on Pendragon’s accounts by KPMG, the accounting firm.
KPMG said: “Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes … An interim review cannot be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit.”
Along with the reporting of its first-half results, Pendragon said Chris Chambers, non-executive chairman, would step down on 1 October and Bill Berman, a non-executive director who joined in April, would run the business as interim executive chairman.
Pendragon is looking for a new chief executive following the departure in June of Mark Herbert after three months in the job. Herbert clashed with the board over the company’s decision to remain focused on the used car market.
Chambers said: “I am firmly of the view that the company now needs an executive chairman who can dedicate the time and industry expertise that the company requires in these difficult markets.”
Pendragon shares, which have more than halved in value this year, fell 9% to 10p.