Good morning!

I am currently in an airport as I set out to spend the day with the Stocko team in Oxford.

Paul might be along with updates in a short while, but either way I thought I would open up the thread for reader comments.

Best wishes,


Morning everyone, it's Paul here!

I'll also be heading for Stockopedia HQ in Oxford shortly. There's just enough time to squeeze in a few brief comments on some of today's RNSs.

Pendragon (LON:PDG)

There's a profit warning today from the UK's largest car dealers. This is rather surprising, since brokers were upgrading forecasts as recently as August, on the back on strong H1 results. So this suggests a fairly nasty slowdown in H2.

It says that underlying profits for 2017 will now be about £60m. It did £48m adjusted profit in H1, so that suggests only £12m profit in H2. The latest forecast I have from one broker suggests £71.1m adjusted PBT in 2017. So today's company forecast of £60m is a 15.6m shortfall - all of which has occurred in H2 remember - so annualised, it suggests a steeper fall in profits.

Reasons given for the profit shortfall are - declining new car sales, and a fall in used car prices. I suppose this was bound to happen, due to the boom in car sales in recent years. Furthermore, weaker sterling has increased prices, and there's no doubt that consumer confidence has weakened this year. So perhaps people are less inclined to make big ticket purchases? Although given that most private cars are now not bought, but are leased, then I question whether car purchases really are big ticket items any more? After all, if you can lease a brand new Audi A4 for £179 per month, and a car is essential for you, then would you really worry about signing on the dotted line? Also, a new car means little servicing or repair costs, so there's a strong argument for driving a brand new car, as opposed to a more thirsty & unreliable cheap older car.

Strategic review - whenever those words are mentioned by a company, I wince. It usually means there are some kind of structural problems. That in turn usually means exceptional costs, and a period of time for the business to be re-shaped,…

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