Turners Group lifts first-half profit 15 per cent, eyes further acquisitions

Photo / Michael Cunningham

Turners Group, the financial services firm focused on the automotive sector, posted a 15 per cent gain in first-half profit and said all its businesses were expected to lift earnings in the full year.

Profit rose to $8.5 million, or 12.95 cents per share, in the six months ended September 30, from $7.4m, or 11.55 cents, a year earlier, the Auckland-based company said in a statement. On a pretax basis, profit of $11.8m was ahead of the company's forecast of $11.6m and the year earlier's $10.3m. Revenue rose 36 per cent to $115.1m.

Turners, formerly known as Dorchester Pacific, has built itself into an integrated automotive financial services group, with businesses spanning automotive retail, finance and insurance. The company said today that all sectors are expected to deliver a year-on-year improvement in operating profit for the full year, with 10 per cent organic growth expected from existing businesses.

"Turners remains focused on growth, both through M&A and by leveraging opportunities within each business," the company said.

In the first half, the automotive retail business lifted operating profit 31 per cent to $6.9m. The result includes two months' trading from Buy Right Cars, acquired in July 2016, and Turners also launched online car purchasing website Cartopia and is expanding its footprint in the trucks and machinery market, having acquired a further two properties.

"The Buy Right Cars acquisition is settling in well and Tuners will continue to look at acquisitions in the very large automotive retail sector," the company said.

"This sector not only delivers a transactional margin on each sale, it also provides opportunities to cross-sell Turners' automotive finance and insurance products to these customers."

Turners said it's well funded for continuing merger and acquisition activity, having raised $25.56m from convertible bonds in September, and $13.5m from a share placement.

The company's finance business increased first-half operating profit 7.2 per cent to $4.9m as its focus shifts to consumer automotive related lending from commercial lending. Its Oxford Finance unit lifted operating profit 24 per cent, offsetting a decline from Dorchester Finance which is moving to higher quality, lower risk consumer lending.

Turners remains focused on growth, both through M&A and by leveraging opportunities within each business.

Its insurance unit posted an 81 per cent drop in operating profit to $130,000 even as revenue lifted 21 per cent, as the business was impacted by increases in insurance reserves. The latest earnings don't include any contribution from Autosure Insurance, which settles on December 1, and which Turners said will give it scale and enable it to simplify the insurance business from an underwriting perspective.

Turners' debt collection services increased operating profit 51 per cent to $3.4m, 97 per cent of which came from New Zealand.

The company will pay a 3 cents per share second-quarter dividend on December 23, taking the first-half dividend to 6 cents.

Its shares last traded at $3.55 and have gained 18 per cent this year.