Canadian unit weighs heavily on Turners Auctions' first half

Turners Auctions today posted a December half net profit after tax (npat) of $2.8 million that was weighed down by start-up costs linked to its Canadian unit.

Turners result for the first half was 5 per cent down on that of 2002, but 6 per cent higher than its forecast.

If start-up losses linked to Turners Auto Auctions Inc (Canada) were removed, the New Zealand group's npat was up $637,000, or 21 per cent, on the December 2002 half.

Turners issued a fully imputed dividend of eight cents per share, up one cent from the previous same period, it told NZX today.

It would pay out 75 per cent of its npat for the half.

The company posted total revenue of $38.8 million (up 20 per cent from the year before), mostly from sales in its eight units.

Earnings before interest and tax (ebit) was $5.1 million ($4.3 million), earnings per share was 10.7 cents (12.1 cents), and shareholders' equity was $18.8 million ($16.8 million).

Turners said the spike in ebit came from the 20 per cent rise in revenue.

Meanwhile, Turners Fleet was the group's stand-out performer with its revenues (up 29 per cent) and unit sales (up 58 per cent) improving.

Turners Auctions also turned in a solid performance with revenue of $17.5 million ($15.7 million) and unit sales of 40,000 (34,780), but commission dipped 2 per cent to $290 per unit.

The group continued to have strong cashflows, it said in a statement.

However, the Canadian business had cost $766,000 -- $528,000 of start-up costs and $238,000 of goodwill written off.

Turners had spent another $517,000 upping its stake in the Canadian unit from 51 per cent to 84 per cent.

"The biggest challenge the group faces in Canada is its ability to attract buyers to the Turners Auctions process which incorporates high quality premises and systems," it said.

"The budgeted marketing spend has not yet been successful in changing the perception of buyers in North America.

"To this end Turners Auctions has made a market support payment to the Canadian subsidiary with a view to assisting its market penetration."

Looking ahead, the Turners' board was confident the group would continue to build on its first half in the six months to June 2004.

At 10am, Turners shares were down 20c at $4.50, having traded between $2.16 and $5.00 in the past year.

- NZPA