Auto Trader Share News (AUTO)

(Sharecast News) - Auto Trader Group issued an unscheduled update on Thursday morning, as a result of the Covid-19 coronavirus pandemic, saying that the UK car retail market was facing "unprecedented levels" of uncertainty.
The FTSE 100 vehicle marketplace operator noted that the government was urging companies to hold on to their employees, and for businesses to "rally round" to help the collective national effort.

It said that it would be contacting its customers on Thursday to let them know that it would not charge retailer clients for advertising packages during April, and would allow its customers to defer payment of their March advertising costs by 30 days.

"As the UK's leading automotive marketplace we have chosen to act in what we believe is a responsible way to protect our customers, who are key stakeholders in our business," the board said in its statement.

"Given the strength of our business we believe this to be in the long-term interests of our shareholders and employees, and will ensure that we continue to be the place where the UK public find their next car."

Auto Trader said the move would have an immediate financial impact, explaining that it had chosen the approach not in response to immediate pressures on the business, but rather to continue to support the industry.

"We have chosen to do this because we are able to - our low cost base, the strength of our balance sheet and our access to credit."

The company's full year results for the financial year ending 31 March would be broadly in line with market expectations, it said.

However, due to current market conditions it said it could not sensibly provide guidance for the 2021 financial year, although the actions it was taking would result in an operating loss for April of between ?6m and ?7m.

The group said its balance sheet was strong, reporting that at the end of February it had drawings of ?289m on its ?400m revolving credit facility, with a net debt-to-EBITDA ratio of 1.1x, which was "well below" its covenant level of 3.5x.

It said it would not buy-back any more shares until it reports its full year results in June, and would retain its commitment to return cash to shareholders.

"These are unprecedented times so I believe that it is vital that we pull together and support our people, our customers and our industry," said chief executive officer Nathan Coe.

"We are committed to supporting our retailer customers throughout this uncertain time.

"It is equally important that we continue to prioritise the well-being and safety of our people, and we are taking all necessary action to ensure that they are receiving all the advice and support that they need."

Auto Trader said it would report its full year results for the financial year ending 31 March on 4 June, when it will also provide a more detailed update.