Eagers (ASX:APE) share price sinks despite profits racing 112% higher

A negative sentiment is in the driver's seat of the Eagers share price today…

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Key points

  • The Eagers Automotive share price is trending lower following its record result for FY21 
  • Profits more than doubled as demand for vehicles continued and operational expenses remained controlled 
  • Shareholders are being rewarded with a 70% increase to Eagers' final dividend 

The Eagers Automotive Ltd (ASX: APE) share price is slipping on Thursday morning.

It seems shareholders were hoping for more than the slam dunk given on its FY21 full-year result. At the time of writing, shares in Eagers on the ASX are down 4.3% to $13.40.

Let's dive into the company's numbers for the full year.

Eagers share price in focus amid big year for the bottom line

  • Revenue down 1% year on year to $8,663.5 million
  • Underlying EBITDAI from continuing operations up 60% to $455.9 million
  • Record full year statutory profit after tax of $330.7 million, up 112% year on year
  • Earnings per share (EPS) up 117% to 125.2 cents per share
  • Fully franked final dividend of 42.5 cents per share, up 70% year on year
  • Cash position of $197.6 million as at 31 December 2021

What else happened during the half?

In a record year for ASX-listed Eagers, strong demand for vehicles led the company forward. While group revenue slipped slightly, the car retailing segment experienced an 8.6% increase in revenue to $8,438.3 million. Though, the Eagers share price is responding negatively to the result.

Notably, sales across the new vehicle market outstripped deliveries as supply chain issues continue to cause delays. As a result, Eagers' inventory levels fell from $1,025.8 million at the end of 2020 to $874 million at the end of 2021.

However, inventory levels were also lower following the sale of the Daimler Trucks business. The discontinued operations provided a pre-tax gain of $30.2 million during the year. While on the buy side, Eagers acquired Toowoomba Ford and franchises in Cardiff and Maitland.

Eagers also made a strong push for more property during FY21. This is highlighted by the company's $169 million worth of property acquired in the full-year period. In a similar vein, the auto retailer made investments in new retail formats including AutoMall West at Indooroopilly Shopping Centre in Brisbane.

What did management say?

Commenting on the record result, Eagers CEO Keith Thornton said:

Our record full year results reflect strong market dynamics, our disciplined focus on maximising operational performance and the continued benefits from executing the five pillars within our Next100 Strategy.

Our franchised automotive business has delivered a record year. The performance was achieved despite significant COVID-19 related disruption, with government mandated lockdowns heavily restricting trading in the second half and was supported by our simplified business and transformed cost base.

Eagers share price snapshot

An investment in Eagers shares would have been a worthwhile one over the past year. Unsurprisingly, the company has performed solidly amid the backdrop of frenzied buying of new and used vehicles.

For the past 12 months, the Eagers share price is up 13.5%. Meanwhile, the broader S&P/ASX 200 Index (ASX: XJO) is up 3.9% — which reflects an impressive outperformance of 9.6%.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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