AP Eagers Ltd (ASX: APE), Australia's oldest listed automotive retail group, turned in a strong full-year performance. In 2014, the general economy was still weak and total national vehicle sales were slightly down from 2013, especially in resources producing states like Queensland and WA. Still, AP Eagers drove sales with cheaper financing from lower interest rates and continued auto dealership acquisitions.
Here are the key annual results:
Revenue $2.86 billion, up 6.9% from $2.67 billion
Earnings before interest, tax, depreciation and amortisation (EBITDA) $138.1 million, up 12.9% from $122.3 million
Net profit after tax (NPAT) $76.7 million, up 19.9% from $63.9 million
Earnings per share 43 cents, up 18.1% from 36.4 cps
Dividend per share final dividend of 18 cents per share, up 20% from 15 cps, making the total dividend 27 cps, up 17% on financial year 2013
Full-year business highlights:
– Used car sales profitability as well as related financing and insurance income were up. AP Eagers' own carzoos.com.au online car search and sales site, similar to Carsales.Com Ltd's (ASX: CRZ) website, drove improvement in margin performance.
– The Brisbane hail storm in late November affected 2,200 vehicles at the company's various Brisbane dealerships. However, the company was fully insured and at the end of December the majority of the hail insurance claim was paid. AP Eagers noted some 60,000 vehicles across the whole Brisbane region were damaged, so it expects trading in the first quarter of financial year 2015 will benefit from the necessary vehicle repair and replacement.
– Several recent acquisitions added to the higher group revenue. Also, the company received a bigger full year dividend distribution from Automotive Holding Group Ltd (ASX: AHE) of $12.1 million, compared to $10 million in financial year 2013. AP Eagers is a substantial shareholder of Automotive Holdings with a 19.9% stake.
Full-year outlook for financial year 2015
Including the projected sales of its most recent dealership acquisitions, AP Eagers projects an 8% increase in group revenue, slightly higher than the 6.9% annual revenue growth just reported. It expects to see a turnaround in its truck business performance, which had a disappointing result in financial year 2014.
The stock pays a 3.4% fully franked yield. What's more, AP Eagers has a strong track record for raising dividends, so I think it could be a suitable stock for dividend investors looking for stable and growing income.
