The Eagers Automotive Ltd (ASX: APE) share price is climbing today amid a positive trading update from the company.
At the time of writing, the automotive retailer's shares are swapping hands at $10.89, up 3.13%.
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Eagers Automotive expects to exceed profit guidance
Investors are driving up the Eagers Automotive share price after the company is forecasting a bumper result for H1 FY22.
According to the company's announcement, Eagers Automotive is expecting to report a statutory net profit before tax of $246 million. This represents an improvement on the previous profit guidance given in May of between $225 million and $240 million.
Furthermore, underlying operating profit before tax is anticipated to be roughly $195 million, up from the $183 million to $189 million indicated in May.
Both guidance updates are for the six-month period ending 30 June 2022 (H1 FY22).
Management stated the improved outlook is from a number of factors that are helping support the business despite supply issues. This includes strong demand for its new car order bank and the benefits of its ongoing productivity and cost-out programs.
Eagers Automotive said that it recently completed the sale of the Bill Buckle Auto Group and associated properties to the Australian Motor Group.
The cash proceeds from the divestment led to the company realising $88 million and a profit before tax of around $48 million.
Eagers Automotive has liquidity of $843 million, including $326 million in cash and corporate debt of $13 million.
Given the superb health of the balance sheet, the company intends to carry out its share buyback program.
Investors may also want to keep an eye out on 25 August when the company is scheduled to release its results.
Eagers Automotive share price snapshot
Over the past 12 months, the Eagers Automotive share price has lost more than 28%, with year-to-date down around 19%.
The company's shares touched a 52-week low of $8.65 last month following extreme volatility on the ASX.
Regarded as Australia's largest car dealership group, Eagers Automotive commands a market capitalisation of about $2.78 billion.
