'Great success': Peter Warren (ASX:PWR) share price revs up on robust first-half results

Peter Warren just dropped its H1 FY22 results. We have the details…

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Key points

  • Peter Warren shares are travelling 4.5% higher at $2.77 on the back of a positive trading performance
  • Underlying profit before tax surged 35% to $36.2 million
  • The board declared its first-ever interim dividend of 9 cents per share

The Peter Warren Automotive Holdings Ltd (ASX: PWR) share price is advancing on Tuesday afternoon. This comes after the Australian automotive dealership group announced its first-half results for the 2022 financial year.

At the time of writing, Peter Warren shares are up 4.53% to $2.77. For comparison, the All Ordinaries Index (ASX: XAO) is down 1.19% to 7,417 points.

Peter Warren share price climbs amid strong H1 FY22 result

The Peter Warren share price is heading north today following the company's performance for the 6 months ending 31 December 2021. Here are some of the key highlights:

  • Total revenue of $779.2 million, up 4% on the prior corresponding period (H1 FY21 $749.6 million)
  • Earnings before interest, taxes, depreciation and amortisation (EBITA) of $54 million, up 28% (H1 FY21 $42.3 million)
  • Underlying EBITDA margin of 6.9%, up 130 basis points (H1 FY21 5.6%)
  • Underlying profit before tax (PBT) of $36.2 million, up 35% (H1 FY21 $26.9 million)
  • Fully franked inaugural interim dividend of 9 cents per share

How did Peter Warren perform in H1 FY22?

In the first half of FY22, Peter Warren recorded sales revenue of $778 million, up 4% on the prior corresponding period. This is despite government-mandated lockdowns which impacted volumes as well as Honda's switch to an agency model in July, which is estimated to have cost $12 million.

Under an agency model, Peter Warren does not recognise revenue and the cost of goods associated with the sale of new vehicles. This has since been replaced by commission revenue for delivery.

Along with operating costs being well managed, management responded to the ever-changing conditions related to COVID-19.

As such, the group experienced strong levels of demand across the eastern seaboard, with its order book (for NSW and QLD) up 97%. The diversity of brands in Peter Warren's portfolio has helped counter the uncertainty surrounding the supply of vehicles.

The company also secured a $96 million debt facility which leverages its property assets to support its growth strategy.

What did management say?

CEO Mark Weave commented on the results driving the Peter Warren share price today:

…Despite a challenging period impacted by COVID-19 lockdowns and supply constraints across our OEM partners, we have materially progressed our strategic geographic expansion and our omni-channel sales approach to great success.

We welcome the Penfold Motor Group and its experienced management team into our group and look forward to further expanding our operating footprint over time, as we deliver our auto mall concept to Victoria.

This result reflects the underlying strength of our business and is a credit to our teams who continue to adapt to the changing market conditions. Reflecting this, the Board has declared an interim dividend in line with our target payout ratio to provide a return to our shareholders.

What's the outlook for Peter Warren?

Looking ahead, Peter Warren remains optimistic about the continuation of earnings for the full financial year.

A strong order book, anticipated improvement in new vehicle supply, and underlying demand are expected to underpin future performance.

However, limited downward pressures on new vehicle margins are forecasted in the period to 30 June 2022.

Nonetheless, the acquisition of the Penfold Motor Group in December 2021 will contribute to revenue in the second half.

The company refrained from providing earnings or profit guidance for the FY22 full year.

Peter Warren share price snapshot

The Peter Warren share price is down around 20% over the past 12 months. It has also fallen 6% this year to date and 4.5% over the past month.

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