Turners Automotive upgrades 2021 earnings guidance

Turners Automotive's earnings are being boosted by its car finance arm. Photo / Hawke' Bay Today.

Turners Automotive has upgraded its 2021 annual earnings forecast for the second time in a row, led by its finance wing.

The company, which is involved in car auctions, vehicle finance and insurance, now expects its net profit before tax to be within a $33 million to $35 million range, with trading exceeding expectations across the board.

The updated pre-tax guidance implies an indicative full-year dividend of around 18 cents per share, fully imputed, based on the midpoint of the updated range and the company's dividend pay-out policy of 60 to 70 per cent of its net profit.

Turners last upgraded its guidance in November, which was towards the upper end of the $28m to $31m of the range provided at its September annual meeting.

"Whilst all three major business units continue to contribute strongly, finance has led the majority of the uplift, with new lending volumes tracking well ahead of the prior year," Turners said.

The seasonal spike in finance arrears has also been more muted than previous years, reflecting continued improvements in ledger quality, it said.

Meanwhile, auto retail demand remained solid and margins have continued to benefit from a supply-constrained operating environment.

Insurance policy sales also tracked well ahead of the prior year and claims ratios are being well managed.

Turners' second quarter dividend of 4.0 cents per share will be paid on January 28.

"Overall, management is encouraged by the broad-based performance, which reflects the deliberate business diversification strategy, the resilient used car market, and the combination of activity and annuity based businesses within the group," Turners said.

NZX-listed Turners shares last traded at $3.20, having gained 10 per cent over the past 12 months.