Shares of Automotive Group Holdings Ltd (ASX: AHG) soared more than 5% today after it released its full-year earnings results, revealing a strong lift in revenue and an even greater increase in earnings.
The Perth-based Automotive Group is the country's largest automotive dealership business and its largest refrigerated transport logistics provider. The company has undertaken a strategy to continue aggregating in what is a somewhat fragmented market. This was highlighted by its recent acquisition of Bradstreet Motor Group and three Mercedes Benz passenger and van dealerships in Perth.
Indeed, this strategy has helped it to generate outstanding returns for shareholders over the last six years and that trend looks set to continue into the future after today's results.
The group reported a record revenue result of $5.25 billion, up 10.8% on the prior corresponding period, and a 20.8% improvement in net profit after tax (NPAT) to $88.1 million. Meanwhile, operating NPAT (which excludes costs and fees related to acquisitions, as well as impairments of assets) rose 20% to $94.2 million with operating earnings per share, or EPS, up 6% to 30.7 cents per share.
Operating earnings before interest, tax, depreciation and amortisation (EBITDA) rose 20.8% to $215.8 million.
Where did the growth come from?
Much of the group's growth came from its core Automotive Retail division which recorded a 10% lift in revenues and a 21.7% improvement in operating EBITDA. It described its performance in New South Wales as "outstanding", while it also recorded improved performances in Queensland, Victoria, New Zealand and Western Australia.
The Refrigerated Logistics division also contributed an impressive 41.7% lift revenues and a 52.2% jump in operating EBITDA to $45.2 million, thanks to an improved EBITDA margin of 7.4% (compared to 6.9% in the year before).
Unfortunately, the group's "Other Logistics" segment didn't fare so well. Revenues fell 13.3% to $365.2 million while operating EBITDA declined 38.6% to $10.5 million. The operating EBITDA margin was just 2.9%, down from 4.1% in the 2014 financial year.
What next for Automotive Group?
With just over $69 million cash on hand, Automotive Group appears well positioned to continue growing both organically and via new acquisitions. It said: "The Group remains focused on its core strategies, with continued investment in appropriate business acquisitions and capital assets and (it) will continue to divest non-core assets and review underperforming businesses where appropriate."
The company declared a fully franked final dividend of 13 cents per share, taking its full-year total to 22 cents. That's a fully franked yield of 5.1% based on today's price of $4.35, and it could be an excellent pick-up for investors looking for both growth and income.
