Pendragon lifts profit forecast again on strong used car sales

© Reuters.

(Reuters) -British car dealer Pendragon lifted its annual profit outlook for the second time in as many months, reflecting strong demand for used cars amid a shortage of new vehicles due to the global chip crisis, sending its shares higher.

The shortage of new cars in October and November was also not as pronounced as expected, the Nottingham-based firm said, prompting it to raise annual underlying pretax profit projections to about 80 million pounds ($107 million).

In October, it had raised its annual profit projection to 70 million pounds from a previous range of 55 million to 60 million pounds.

Shares in the company jumped 6% to 19.70 pence by 0900 GMT and were among the biggest gainers on the small cap index.

“It looks increasingly likely that these drivers will be continuing into the New Year,” Peel Hunt analysts said in a note.

Rival British car dealers Inchape and Lookers have also raised their annual outlook as they enjoyed a strong rebound in demand after the lifting of lockdowns.

Strong gross profit per unit boosted results, Pendragon said, after the company was forced to shut some loss-making stores and cut 1,800 jobs in 2020 due to the coronavirus pandemic and challenges related to Brexit.

Pendragon said it wary of further disruption from the pandemic to its local markets and global supply chains.

($1 = 0.7509 pounds)

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