Car retailer eyes import option

WILLIAM GLEESON

European Motor Holdings, the motor retailer, is looking to expand into the car import business. The plan was announced as the company announced pre-tax profits of pounds 7.9m for the year to end of March - a 54 per cent rise on the previous year, mainly on the back of acquisitions. Turnover was up 80 per cent to pounds 283.9m.

Richard Palmer, chief executive, said the company was considering expanding into motor importation.

"Adding a third leg to the motor activities would be a good way of spreading the risk in what is a cyclical business," Mr Palmer said.

He was previously involved in car imports when he ran Western Motors and held the rights to import Lada and Proton cars. "There are plenty of opportunities around the world," he said.

Operating profit from the motor retail division increased to pounds 6.5m. The division was boosted by a pounds 3m contribution operating profit from Normand in the eight months following its acquisition. The company operates from 36 locations with 55 franchises.

However, profits at the company's vehicle washing subsidiary, Wilcomatic, fell back from pounds 3m to pounds 2.6m. The company said the setback was entirely due to competition in the market for equipment to clean large vehicles such as oil tankers.

EMH said it was seeing a strong level of forward demand for the new N- registered plate, due on August 1, with current orders up about 15 per cent on the same period last year.

Mr Palmer said: "We are seeing strong levels of demand, and if the rest of the motor trade is doing as well, the industry could be in for a good month.

"We've got a lot on our plate with the integration of Normand, and we are investing in new franchises at Gateshead and Bolton for Renault, Rover, Fiat and Alfa Romeo."

The company expects gearing would probably show a slight increase in the year to around the mid-20 per cent level, compared with a year-end figure of 21 per cent.

Mr Palmer said: "We are planning to spend around pounds 5m to pounds 6m in the current year, but we are still comfortable with this level of borrowing."

He said there were no new acquisitions in the pipeline and no plans to call on shareholders for fresh equity.

"We would only have a rights issue if the right sort of deal came along, but there's nothing on the agenda at present," he added.

"There remains a great deal of scope for further organic growth in our existing businesses and we are continually looking for business opportunities that will enhance shareholder value."

Earnings per share are 12p, up from 9.6p in the previous year. Dividend per share is 5p, up from 4.25p last year.