Alternative Finance

Auto Trader raises full-year earnings outlook to between £169 million and £171 million

New and used car sales website Auto Trader has revved up its full-year earnings outlook after hailing better-than-expected sales.

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The firm, which attracts around 43 million visits to its websites a month, said that while the number of car sales forecourts advertising on its sites remained flat since its half-year, it saw sales boosted as retailers and private sellers placed more ads.

It said thanks to buoyant trading over the past four months, it expects full-year underlying earnings to edge ahead of City expectations, to between £169 million and £171 million.

The group posted underlying operating profits of £144.1 million in the year to March 29 2015.

Auto Trader, founded in 1977 as a classified ad magazine, floated on the London Stock Exchange in March last year at 235p a share and the stock has since surged by 60%.

Shares were up 4% after its latest profit cheer.

It is the latest dose of good news from the car sales sector after Pendragon posted a 23% surge in annual pre-tax profits thanks to record used car sales – up 11% to £15 million.

Industry figures also showed new car sales last month reached an 11-year high for January.

A total of 169,678 new cars were registered in the UK, up 2.9% compared with January 2015 and the highest sales figure for January since 2005, according to the Society of Motor Manufacturers and Traders (SMMT).

Steve Clayton, head of equity research at Hargreaves Lansdown, said Auto Trader was benefiting from its pole position in the market and a shift in the way cars are bought and sold.

He said: “The days of having to trudge around forecourts, trying your best to avoid the salesman are becoming a thing of the past.

“Nowadays, most consumers buy a car from the first forecourt they visit, having already made their buying decision online.”

The group has enjoyed a bumper past couple of years, with annual profits trebling in the year to March 2015 and pre-tax profits of £10.9 million.

Recent half-year results showed underlying operating profit jumped 17% to £83 million in the six months to September 27.

In its latest trading update, Auto Trader said it had seen a strong sales performance from car retailers and its consumer services business, which includes private sellers as well as third party advertisers such as insurers and loan finance firms.

Profits are also being boosted by a tight control of costs, added the group.

Auto Trader was known for its magazine full of used-car adverts, but it began to go online from 1996 and the final publication of the print magazine came in June 2013.

In the mid-90s the group diversified into a number of foreign markets including the Netherlands, South Africa and Italy. But in 2013 the business sold off most of its overseas operations and now focuses on the UK and Ireland.

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