Shares in Turners Automotive Group fell as much as 7.4 per cent after it warned market conditions have deteriorated markedly.

Turners' shares sank as much as 20 cents to $2.53, taking their year-to-date decline to 23 per cent.

Investors were reacting to the company's comments that it had a bad October and that if such conditions persist, pre-tax annual profit could be 5-to-10 per cent below previous guidance of $34-to-36 million.

The company has just reported a 28 per cent jump to $12.8 million in first-half net profit, but that included the $3.4 million it made on the sale-and-lease back of a property at Wiri, south of Auckland.

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First NZ Capital analyst Greg Main says the underlying result excluding the property sale showed growth of just three per cent.

The market will be wary "until we get some clarity" on how well sales go heading into Christmas and the summer when people tend to buy more cars.

The company says trading conditions through the first half were variable, with tough market conditions in the first quarter and a bounce-back in the second quarter.

"The diversified revenue streams have really demonstrated their value through the first half of this year. However, market conditions, particularly in the used import car market, remain challenging and pressure is being placed on vehicle margins right across the industry," says chair Grant Baker.

The company says the Wiri sale is in line with its strategy of optimising its real estate.

Chief executive Todd Hunter says Turners has more than a five-year pipeline of such property opportunities as it shifts its on-the-ground operations from industrial areas to higher-profile retail sites and looks to recycle capital.

The company currently has potential deals in Whangarei and on Auckland's North Shore, he says.

The results show retail sales through Turners Cars in the six months ended September were up 3 per cent on the prior year. Buy Right Cars also increased its market share with unit sales up 9 per cent.

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However, Turners' retail sales were down one per cent in dollar terms at $111.8 million and operating profit from the retail operations fell 9 per cent to $8 million.

The company's finance division, now branded Oxford Finance, also reported a 2 per cent fall in operating profit for the six months.

The company says that reflects a disappointing performance from its non-recourse lending through Motor Trade Finance to more than 300 dealers and franchisees with impairments higher than expected.

It has now imposed stricter lending criteria on its non-recourse loan offering.

Turners' debt management arm, EC Credit, also reported an operating profit fall of 10 per cent to $3.1 million, reflecting the loss of a large Australian customer which decided to take its credit control functions in-house.

The star of Turner's results was its insurance Autosure business which lifted operating profit 144 per cent to $6.4 million, but that included the profit from the Wiri sale.

- BusinessDesk