Automotive Holdings Group (AHG) expects to deliver operating net profit after tax $50M for FY2019, based on trading performance for the 10 months to the end of April and current market conditions, compared with previous guidance of $52-56 million as advised in February 2019.
This revised outlook reportedly reflects the challenging conditions in franchised automotive retail margins and volumes as well as weaker-than-expected April performance in AHG’s Refrigerated Logistics division on the back of subdued Easter trading.
May and June are typically higher profitability months in the automotive retail sector, according to AHG and will have a significant bearing on Group’s financial performance for 2019.
The actual result for FY2019 may be impacted by a range of factors, including the evolving market conditions (particularly in automotive retail), consumer behaviour around the upcoming Australian Federal Election and any negative impact resulting from the review of Refrigerated Logistics’ receivable balances.
Following extensive upgrades to the Refrigerated Logistics division's financial reporting systems, AHG (with the assistance of external advisers) is undertaking a review of the carrying value of receivables generated across prior years and FY2019.
While this review is ongoing and the extent of its financial impact on the Group is not yet certain, it may result in some write down of the division's receivables generated across one or more periods.
The current expectation is that any potential impact would not be material to AHG's balance sheet or future cash flows beyond FY2019, but it could ultimately have a bearing on AHG's earnings outlook for FY2019.
AHG would not expect any of the above to impact the takeover bid from AP Eagers.