Slow trading hits Kwik-Fit: 'Toughest conditions in 22 years' send earnings down

PRE-TAX profits at Kwik-Fit, the tyre and exhaust fitter, fell 47 per cent to pounds 17.1m in the year to February. Tom Farmer, chairman, blamed 'the toughest conditions in the automotive industry that Kwik-Fit has experienced in 22 years of trading'.

A pounds 20m fall in operating profits matched a drop in sales from pounds 254m to pounds 234m, reflecting high fixed costs. Profits were flattered by a pounds 3.7m profit on property disposals compared with a pounds 770,000 loss last year.

Mr Farmer said that trading had been a lot slower than expected. He had hoped that new tyre-tread depth regulations, effective in January 1992, would boost sales, but drivers had deferred and reduced expenditure on car maintenance.

Tyre sales fell by about 10 per cent over the year and a trend towards fitting remoulded and cheaper imported tyres reduced margins. A police survey estimated that up to a quarter of all tyres are illegally bald.

The number of motorists driving on to Kwik-Fit's ramps rose slightly to 4 million but the average spend was 5 per cent lower. Mr Farmer said costs, up just pounds 10 a day per depot, had been kept as tight as possible.

Despite the downturn in sales, Kwik-Fit continued to expand, adding 19 new depots to take the total in four countries to 610. A further 33 outlets are planned for this year.

Earnings per share fell from 13.3p to 7.06p. The final dividend is maintained at 1.35p, making an unchanged total of 3.35p. The shares rose 1p to 107p.