Growth returns at Evans Halshaw: End of four-year profit slide sends motor dealer's shares soaring

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The Independent Online
SHARES in Evans Halshaw, the Midlands motor dealer, jumped 27p to 376p yesterday after the company reversed a four-year profits decline. Pre- tax profits in the six months to June jumped 146 per cent to pounds 3.7m.

Geoffrey Dale, chairman, said that sales in the first two weeks of August, when new L-registration cars became available, were 15 per cent ahead of last year. 'These positive results will continue, driven by a new car market which is forecast to grow by 10 per cent this year, with further recovery beyond,' he said.

Mr Dale said he was particularly encouraged by the progress of the company's two 'motor villages', a concept of multi-franchise dealerships pioneered by Evans Halshaw. The sites at Birmingham and Solihull had already matched budgeted sales.

The growth in Evans' profits was given a boost by a 20 per cent increase in new car sales, well ahead of the national average growth of 8 per cent. Turnover of used cars was also 20 per cent higher and total car sales exceeded 16,000 during the six months.

The firm's recovery underlined the high operational gearing of motor retailing. Last year the company took pounds 2m of costs out of the business, ensuring that a high proportion of increased sales would fall through to profits. Turnover rose from pounds 169m to pounds 189m. Earnings per share matched the jump in pre-tax profits, rising 146 per cent to 11.3p. There was a 6 per cent increase in the interim dividend from 3.6p to 3.8p.

In 1988 Evans made pre-tax profits of pounds 10m but earnings per share had fallen every year since. The dividend, which was uncovered last year, had been held since 1989. Analysts expect full-year profits to rise to pounds 7.5m compared with last year's pounds 1.7m.