Half Year Result to 31 December 2023

The Colonial Motor Company Limited has released its results for the six months ended 31 December 2023. The Company recorded a trading profit after tax for the first half of the 2024 financial year of $9.1m, down 35.9% on the comparative period’s very strong result.

Chair, Ash Waugh, confirmed that as reported in the most recent guidance update on 18 January 2024, the prior Government’s clean car vehicle legislation had significant distorting impacts on the new vehicle market. The current Government’s telegraphed and welcome decision to cease the Clean Care Discount program led to inevitable negative market impacts in November and December 2023. It logically suppressed immediate term demand for non-EV vehicles, pushing registration and sales into January 2024. This suppressed demand, a high interest rate environment and associated inventory holding costs also influenced the half year results.

The new light vehicle industry totalled 140,850 registrations for the 2023 calendar year, down over 15% on 2022. The later months of the year were clearly heavily impacted by the issues already mentioned, Mr Waugh said. Conversely, the heavy truck market was up 7% on the prior year.

He noted that added to the trading conditions were the known start-up costs incurred to launch the new venture into JAC light trucks. Diversification into the light truck market and the establishment of a new brand in New Zealand will take time to mature and we do not expect this investment to make a positive contribution in 2024.

The Company reported the rebuild of Agricentre’s tractor dealership in Gore has been completed. Post the end of the half year, a very desirable property was acquired in Nelson which provides a ‘foothold’ and opens options for the future in that key market. In this somewhat volatile property market environment, we have adopted a more conservative program for dealership development and refurbishment for the remainder of 2024, Ash Waugh said.

He addressed the outlook ahead by noting that although the Company’s trading conditions stabilised in January, we remain cautious for the remainder of the financial year.

The same fundamental issues of economic uncertainty, a relatively low New Zealand dollar, cost-of-living factors and stubbornly high interest rates, along with concerning geo-political tensions, will continue to influence consumer confidence. These will impact to an unknown degree on new and used vehicle enquiry in the second half of the financial year. As inventory levels ease from their current peak, but remain elevated in the short term, high interest costs will continue to impact earnings.

Mr Waugh advised the Board had declared an unchanged fully imputed interim dividend of 15 cents per share.

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