MTO Announces Profit Guidance; FY19 EBITDA Range $16.5m to $17.5m

  • May 03, 2019 AEST
  • Team Kalkine
MTO Announces Profit Guidance; FY19 EBITDA Range $16.5m to $17.5m

Motorcycle Holdings Limited (ASX: MTO) was founded in the year 1989 and is the largest motorcycle dealership operator in Australia with 34 franchises which operates from 24 different locations in Queensland, New South Wales and the Australian Capital Territory.

On 3rd May 2019, Motorcycle Holdings Limited provided its investors with the profit guidance and the trading update of the company. The company expects its FY2019 EBITDA to be in the range $16.5 million to $17.5 million.

The CEO of Motorcycle Holdings Limited, David Ahmet highlighted that in Q1 FY2019, the new Motorcycle market contracted by 14.6%, which adversely impacted the performance of the company. However, now the market share of the company has improved and has increased from 9.9% in the previous year to 10.6% in the current year.

Let’s quickly run through the performance of the company in the current financial year

During the first quarter of FY2019, the company witnessed a slow market, aided by the slowdown in Harley-Davidson sales. The sales of Harley Davidson were down by 25.1% during the first quarter nationally. However, the same stores sales performance of the company outperformed the market but were still down. The new bike market was down by 7% for September 2018 quarter and the road bikes were down by 13% for September 2018. On the other hand, the used bike market was steady and MTO maintained its growth by adding more outlets.

On the financial numbers front, In the first half of the FY2019, there was an increase in the underlying EBITDA by 19.5% to $10.4 million. The sales revenue during the period was up by 24.1% to $172.8 million. There was also a growth in the total motorcycle sales by 11.2% to 98,555 units.

As a result of the cyclical downturn, the unit sales of the new motorcycle declined during the period. On the other hand, the used motorcycle unit sales had grown in the flat market.

The New motorcycle division reported revenue growth of 3%. However, gross profit declined by 13%. The revenue from the used motorcycle segment increased by 25% and at the same time, gross profit also increased by 25%. The revenue from the retail accessories and parts was up by 45% and gross profit by 48%. The revenue from servicing and repair went up by 10% and gross profit by 9%. The income from the finance, insurance and warranty declined by 11.1%. The company reported a net asset base of $132.6 million. The net cash at bank was reported at $5.1 million.

In today’s profit guidance announcement, the company has stated that a program to lower the cost structure of the business, reduce debt as well as improve operational performance across all divisions so that they are able navigate the tough business conditions.

At present, the shares of MTO are trading at A$ 1.300 (AEST: 2:45 PM, 3rd May 2019), down by 3.704% as compared to its previous closing price. MTO holds a market capitalization of A$83.3 million and approximately 61.71 million outstanding shares.


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