Eagers Automotive Navigates Revenue Growth Amid Profit Pressure

Highlights 

• Eagers Automotive’s 2024 profit dropped 20% 
• Record revenue of $11.2 billion despite earnings dip 
• New Zealand operations faced impairment challenges 

Eagers Automotive (ASX:APE), one of Australia's leading car retail groups, has reported a significant decline in annual profit for 2024, despite achieving record revenue levels. The company faced a 20% drop in profit before tax, bringing the figure down to $335.6 million from $427.3 million in the previous year. The decline has been primarily attributed to acquisition-related expenses and impairments tied to leased assets within its New Zealand operations. 

While the top-line performance reached an all-time high of $11.2 billion, showcasing strong vehicle demand and expansion efforts, this did not translate into higher earnings. Pre-tax earnings also slipped to $516.6 million, suggesting margin pressures amid rising operational costs. 

The dip in profit indicates a transitional phase for Eagers Automotive (APE), as the company continues to execute its strategic growth initiatives. The business has been expanding through acquisitions across Australasia, aiming to increase its footprint and adapt to evolving consumer demand. However, the short-term financial strain from these acquisitions, combined with the revaluation of certain leased assets in the New Zealand segment, has placed temporary pressure on profitability. 

Despite the drop in profit, the record-breaking revenue signals robust demand for new vehicles and successful dealership performance. The market's appetite for automotive products remained resilient through 2024, with supply chain normalization playing a crucial role in sustaining sales volumes across various brands under Eagers Automotive’s portfolio. 

Looking ahead, the company is likely to focus on improving operational efficiency and addressing the financial challenges in the New Zealand division. As it works through acquisition integration and asset optimization, attention will be on restoring profit margins while maintaining growth momentum. 

The 2024 financial results reflect the balancing act between aggressive expansion and bottom-line discipline. While the short-term impact on profit is notable, the strategic direction suggests an emphasis on building a stronger platform for sustainable long-term performance in the competitive automotive retail sector.