Despite continuing supply constraints on new car deliveries, Eagers Automotive (ASX: APE) now expects its interim result (25 August) to exceed guidance provided back in mid-May.
The S&P/ASX 200 auto dealership is guiding to net profit before tax (NPAT) of $246m for the six months to June 30, versus the previously forecast NPAT of between $225m and $240m.
Underlying operating profit before tax of $195m is up from the forecast range of between $183m and $189m.
Management attributes the improved outlook for the half year to underlying strength of the ongoing business, the continued growth of its new car order bank and the benefits of the group’s productivity and cost out programs.
While today’s update is decidedly more upbeat that the commentary supporting previous guidance mid-May, Eagers’ share price was up only modestly (1.14%) at noon.
The sale of Bill Buckle Auto Group delivered cash proceeds of $88m and an estimated profit before tax of $48m.
Management notes while proceeds are recognised in the expected NPAT for the six months ended 30 June 2022, they are not included in the underlying operating profit (before tax) for that period.
Given the underlying strength of Eagers balance sheet, with available liquidity of $843m and net corporate debt of $13m, the company is planning an on-market (circa $250m) share buyback of up to 10% of its issued capital.
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