THE COLONIAL MOTOR COMPANY LIMITED

Unaudited results for the six months ended 31December 2021

Trading Profit after tax at $18.0m, up 42% on the same prior year period

Interim Dividend unchanged at 15cps.

Trading Results

Trading profit after tax for the first half of our 2021/22 financial year was a record high at $18.0m, up 42% on the prior year equivalent period.

Dividend

The Board has declared a fully imputed interim dividend of 15 cents per share.  The dividend will be paid on 28 March, with a Record Date of 18 March.

Trading Conditions

It is seldom that all of our major trading operations within the Group deliver outstanding results in one six-month period but this has been the case over the first half of the financial year.  Motor vehicles, heavy trucks and tractors have all delivered excellent results within a very challenging environment, particularly in terms of stock availability and especially for used cars, where supply remains an issue. 

Disruptions to the supply chain of new vehicle arrivals has been the biggest operational challenge.  From a dealership perspective, managing customer expectations is more complex than ever before.  Demand has generally outstripped supply across the board and while vehicle flows through our dealerships have been strong, we did experience some negative impacts from the covid lockdowns.  Despite these challenges, our dealership staff are working at capacity in an ever changing and uncertain environment.  These efforts are recognised and appreciated at every level.

The total new vehicle industry for the year recovered to end up as an all-time record of 165,287 vehicles registered.  In the case of utility vehicles, the Government’s new emissions-based taxes, that are due to be introduced soon after the end of March 2022, contributed to exceptional demand as buyers endeavour to secure vehicles before prices rise.  Our major franchises scrambled well to meet that demand but as we trade into 2022, stock availability is patchy and with some brands and models it has the potential to adversely affect our trading over the second six months of the financial year.

Property Developments

It is pleasing to report that the major property redevelopments, of the Team Hutchinson Ford facility in central Christchurch and the Capital City Motors Ford and Mazda facilities in Lower Hutt, are finally complete and we are delighted with the outcome of these investments.

A new leased service facility on Mustang Drive in Bell Block, New Plymouth will improve Energy City Motors’ service offering in Taranaki.  Southpac Trucks also has a TRP parts store in the same location.  We also have significant upgrade developments underway at Avon City Ford in Christchurch and Dunedin City Motors is going through a brand refresh. Two years after a major fire in our Nelson Ford Dealership (M.S. Ford), a rebuild of the leased facility is nearing completion.

Outlook

As we present this six month result, New Zealand is awaiting the impact of Omicron and the reality is that it has the potential to be disruptive across all of our businesses.  CMC has developed specific response plans for all operations, including the Group Office in Wellington.

At a macro level, consumer demand continues to be robust.  However, the potential headwinds that could impact the results in the second half include direct and indirect disruptions to trading, labour and vehicle supply due to Omicron, as well as price increases from tax changes and inflation.  CEO Alex Gibbons and the Management Team are performing well and our Dealerships are guided by experienced and capable leaders. We are well prepared as we enter a somewhat uncertain 2022.

Annual Meeting

Due to difficulty in securing a venue, the date for our annual meeting has been moved to Friday, 11 November (previously 4 November).

For and on behalf of the Board

A J (Ash) Waugh

Chair 

17 February 2022