Autotrader plans GBP500 million buyback but annual profit falls short

(Alliance News) - Autotrader Group PLC on Thursday announced plans for a GBP500 million share buyback, and boosted its dividend, but shares fell as annual profit and revenue came in shy of market expectations.

The Manchester, England-based owner of the UK's largest online automotive marketplace said pretax profit rose 3.5% to GBP388.8 million in the financial year to March from GBP375.7 million the year prior.

Operating profit increased 4% to GBP392.7 million from GBP376.8 million, but missed GBP398.7 million company compiled consensus.

Revenue ticked up 3.9% to GBP624.3 million from GBP601.1 million, but was also below GBP632.0 million consensus.

In response, shares in Autotrader fell 4.3% to 475.00 pence each in London on Thursday, the largest faller on the FTSE 100 which was down 0.3%.

Autotrader said the revenue increase was driven by average revenue per retailer growth of 4.9% to GBP2,995 from GBP2,854.

But revenue growth in the second half of the financial year was 3%, and lower in the fourth quarter, reflecting "both the more difficult trading conditions and retailer feedback regarding our Deal Builder product roll-out, which we moved quickly to address".

Sentiment has "improved", and throughout April and May, Autotrader said it has seen a gradual increase in core key performance indicators - retailer forecourts, volumes of paid stock and higher package penetration.

For the financial year just ended, average retailer forecourts edged down to 13,942 from 14,013.

Autotrader said it has "evolved" its Deal Builder product based on "feedback" and have recommenced its roll-out.

The total dividend was increased 9.4% to 11.6 pence per share from 10.6p, including a final payout of 7.8p, up 9.9% from 7.1p a year ago.

For financial 2027, Autotrader expects to return around GBP600 million to shareholders through a GBP500 million buyback as well as paying a third of net income in dividends.

The firm will seek authority to purchase up to 15% of issued share capital at its 2026 annual general meeting.

"The board believes the prevailing Autotrader share price does not reflect the company's fundamentals or long-term prospects. Despite a rapidly changing technology environment, our current competitive position has strengthened, we are adapting our car buying experience to evolve with consumer habits, and we remain comfortable our investment in technology is sufficient to take advantage of AI," it said.

For financial 2027, Autotader expects operating profit between GBP395 million to GBP415 million and that group operating profit margins will be at least maintained from 63% in the year just finished.

It said Autotrader revenue was flat year-on-year in April, due to a lower run rate and a lower price increase.

However, retailer forecourts, volumes of paid stock and package penetration are now improving, and the firm expects to grow in the second half.

Nonetheless, Autotrader expects average retailer forecourts will be 1% to 2% lower for the full year.

By Jeremy Cutler, Alliance News reporter

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