THE COLONIAL MOTOR COMPANY LIMITED

Unaudited results for the six months ended 31 December 2022

Trading Profit after tax at $14.2m, down 21% on the same prior year period

Interim Dividend unchanged at 15cps

Trading Results

Trading profit after tax of $14.2m for the first half of the 2023 financial year was the second highest on record but below the comparative period’s record result.

Dividend

The Board has declared a fully imputed interim dividend of 15 cents per share.  The dividend will be paid on 27 March, with a Record date of 17 March.

Trading Conditions

All of our major trading operations remained in good shape, with motor vehicles, heavy trucks and tractor dealerships all contributing to deliver a very sound result for the six-month period despite softening market conditions.  While the vehicle supply shortage shows signs of easing, waiting lists for popular models continued to pose challenges for our dealerships and lengthy wait times for customers.  The trend of shipping arrivals dictating monthly sales results remains while, at the same time, the industry works through the tail end of the high vehicle demand of the last two years.

The headwinds of growing economic uncertainty, a relatively low New Zealand dollar, the cost-of-living crisis and rising interest rates have softened new and used vehicle enquiries and increased the cost of doing business.  Despite these challenges, our focus on investing in our people and facilities and supporting our long-term customer relationships has proven to be a successful formula.

The new vehicle industry totalled 164,813 registrations for 2022, only slightly down on 2021.  Targeted government intervention via the clean vehicle legislation has continued to drive demand for electric vehicles (EVs), with EVs playing an increasingly dominant role in the Passenger and SUV segments.

Property Developments

Dealership upgrades at Avon City Ford, Dunedin City Ford and Timaru Motors are all on track and due to be completed before the end of the financial year.  A complete rebuild of the Fagan Motors showroom and Agricentre’s tractor dealership in Gore are nearing their start dates.  Later in the year a Mazda brand refresh for South Auckland Mazda and Dunedin City Mazda will get underway.  The Company has also purchased a substantial property in Palmerston North which we plan to develop as a long-term investment to expand and future proof our heavy commercial business in the region.

Outlook

Uncertainty is the constant keyword heading into the second half of the financial year.  While sales of popular vehicle models are expected to stay robust in the third quarter, the lag effect from lower levels of customer enquiry is anticipated to have a greater impact by the fourth quarter.

The economic environment experienced in the first half is expected to remain and will likely tighten the screws on the industry and wider retail sector as the year unfolds.  We will also contend with the lead up to the 2023 general election, which can result in customers deferring major purchase decisions until a degree of certainty resumes.

As showcased at the 2022 AGM, we have an exciting array of new and electrified products coming to market across the portfolio of brands we partner with.  The combination of great staff, investment in facilities and new products positions the Company well to succeed.  However, in the short to medium term, we do expect a degree of turbulence as the supply of EV products remains globally scarce for the foreseeable future.

Christchurch Dealership Tour

Shareholders are invited to a tour of Team Hutchinson Ford and Avon City Motors on the 12th of May 2023.  Please RSVP to cmc@colmotor.co.nz by the 14th of April if you would like to attend.

Annual Meeting

The 2023 Annual Meeting is scheduled to be held in Wellington at the Harbourside Function Venue at midday on the 10th of November.