• Underlying PBT of $7.1m, in line with guidance
• Revenue up 2.2%, with growth in used cars, service and parts
• Gross margin declined 1.5ppts to 16.1% due to new car margin pressure
• Inventory management and cost-out initiatives underway

Peter Warren Automotive Holdings Limited (ASX: PWR) has announced its financial results for the half year ended 31 December 2024, reporting an underlying profit before tax (PBT) of $7.1m, in line with the guidance provided on 12 December 2024. Sales revenue was up 2.2% reflecting growth from acquisitions, although down 4.3% on a like-for-like basis. Customer demand for new vehicles was down on the prior period, impacting margins. The company successfully grew like-for-like revenue across used cars (+7.5%), service (+10.2%) and parts (+4.3%). Gross margin % declined 1.5ppts to 16.1% due to the reduction in new car margins, although margins in used cars, service, parts and finance remained broadly favorable. The company has implemented an inventory management program, with like-for-like new car inventory reducing during the half. Operating expenses increased due to dealership acquisitions, but on a like-for-like basis were down on the previous period. Interest costs increased, with $2.8m arising from acquisitions. The company has a strong balance sheet, with property holdings valued at $225m and a net debt LTV of 37%. In the short-term, the company expects current market conditions to continue, with increased supply, more OEMs entering the market and strong competition between brands, leading to continued pressure on new car margins. However, the company is focused on actively managing the business through the cycle, driving further improvements across costs, inventory and revenue streams.

The company expects any further deterioration in new car margins in H2 FY25 to be offset by management initiatives.

The company's near-term focus is on actively managing the business through the cycle, with opportunities to drive further improvements across costs, inventory and various revenue streams. Over the medium term, the company sees opportunities in further industry consolidation, accretive M&A and leveraging its scale.