Automotive Holdings Group revs up higher sales, profit growth

New acquisitions and stronger retail climate are paying off.

Darryl Daté-Shappard

I started investing after finding a copy of Peter Lynch's "Beating the Street" in the English book section of a library in Japan, where I was living at the time in 1997. Seeing that regular people can find investment ideas just as easily as professionals, I used the philosophy of that book to invest in stocks in Japan, and later in Australia after moving in 2001. I also have experience in property investing, and went on to complete my masters degree in Applied Finance at QUT in Brisbane. I follow the investment style of Peter Lynch, Phillip Fisher and Warren Buffett-- knowing what you invest in, doing your homework to keep up with a stock's story and holding a healthy skepticism of what the stock market calls "value".

Published August 16, 2013 1:57 pm AEST

Automotive Holdings Group (ASX: AHE) is a diversified automotive retail and logistics group operating commercial vehicle dealerships in Australia and New Zealand, $1.02 billion market capitalisation. Locations in NSW, VIC, QLD, WA, and since June 2012 has made five acquisitions.

Results announcement breakdown:

Revenue up 9.1% to $4.278 billion
Operating NPAT up 13.4% to $72.7 million
Full year dividend up 11.1% to $0.20 per share, fully franked

Acquisitions included:

Coffey Ford, Bayside and Peninsula Motor Groups, and McMillan Toyota
Daimler Trucks Brisbane and Newcastle, IVECO
Greenfield Development in Castle Hill and South Melbourne

Total shareholder return of:

1-year: 36.9%
3-year: 74.0%
5-year: 112.7%

Revenue breakdown is 83% automotive retail and 17% logistics. Profit is 69% automotive retail and 31% logistics.

AHG Managing Director Bronte Howson said, "The automotive industry remains strong, with record levels of new vehicle sales, buoyed by manufacturer incentives of low interest rates and service offerings."

Further he added, "In the past twelve months we have used the strength of our balance sheet to support significant growth in our Automotive and Logistics divisions to create sustainable long‐term value for our shareholder."

The share price is close to making new all-time highs since listing in 2005. It hit a bottom of $0.43 in 2008 and now is around $4.00.

Foolish takeaway

Trucks and transport are good leading indicators of a growing economy. As business picks up, more orders are made and delivered, and transport companies buy and maintain larger fleets to match growing business demand. This result is a welcome sign for the Australian economic outlook.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned.

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