AUS
NZ
UK
CA
USA
IND
Highlights
- Caffyns reported a 3% increase in revenue for H1 FY25 and a £0.45 million underlying profit before tax, reflecting improved financial performance.
- The company’s focus on premium franchises, used cars, and aftersales services continues to drive profitability, with new franchise additions expected to enhance sales and margins.
- Despite a positive outlook, Caffyns anticipates higher costs from the increase in National Insurance contributions from April 2025, while benefiting from lower utility and funding costs in the short term.
Caffyns PLC (LSE:CFYN), a leading automotive retailer, has published its half-year report for the period ended 30 September 2024, showcasing improved profitability and a solid outlook for the remainder of the year. The company highlighted a positive performance despite ongoing challenges in the automotive market and continued investment in premium franchises, used cars, and aftersales services.
Solid Financial Performance
Caffyns reported an underlying profit before tax of £0.45 million for the first half of FY25, up from £0.26 million in the same period last year. The company’s profit before tax stood at £0.21 million, significantly higher than the £0.04 million recorded in 2023. This increase was bolstered by income from the sale of a personalised number plate, which contributed £0.14 million to the overall result.
The company’s revenue rose by 3% during the period, demonstrating resilience in a challenging environment. Underlying basic earnings per share (EPS) increased to 12.2 pence, up from 7.1 pence in 2023, while basic EPS also showed an improvement, rising to 5.7 pence from 1.1 pence in the previous year. Caffyns declared an interim ordinary dividend of 5.0 pence, matching last year's payout, reflecting its strong financial position.
Strategic Focus on Premium Franchises and Service Operations
Caffyns continues to focus on premium and premium volume franchises as part of its strategy to deliver higher returns. The company is also placing a significant emphasis on used cars and aftersales services, aiming to improve performance in these key areas. The strategy of concentrating on fewer but larger sites in stronger market areas is expected to help maximize returns and enhance profitability.
The company remains committed to providing a high-quality customer experience, which is central to its business model. While the automotive sector continues to face rapid changes, Caffyns is carefully evaluating its strategy and exploring new growth opportunities to ensure its long-term success.
Positive Outlook for the Remainder of 2024
Looking ahead, Caffyns is optimistic about its performance in the second half of FY25. The company’s forward-order book for new cars remains healthy, although concerns persist about the potential impact of manufacturer restrictions on internal-combustion engine vehicle supply. These restrictions may be implemented to help manufacturers meet government targets for zero-emission car registrations by the end of 2024.
Caffyns expects to benefit from its recent additions of the Skoda franchise in Eastbourne and the CUPRA and SEAT franchises in Worthing, which are anticipated to drive increased sales and profitability. Additionally, the company forecasts improved used car performance in the second half of the year, supported by significantly lower utility costs and reduced funding expenses due to falling interest rates.
However, the company is mindful of rising costs, particularly the planned increase in employers' National Insurance contributions, which will add to operational costs starting in April 2025.
Financial Position
At the end of September 2024, Caffyns had net bank borrowings of £11.5 million, an increase from £9.5 million in 2023. Despite this, the company remains in a stable financial position, with its strategy geared towards long-term growth and sustainability.
