Weaker market shifts guidance down a gear for AHG

Written on the 14 May 2019 by Business News Australia

Weaker market shifts guidance down a gear for AHG

Automotive Holdings Group (ASX: AHG) may see its profits fall 11 per cent on previous guidance due to issues with its retail and refrigerated logistics arms.

The company, which is in the midst of a takeover bid from competitor AP Eagers (ASX: APE), today downgraded its net profit after tax (NPAT) forecast for FY19 down from $52-56 million to $50 million.

"The revised outlook reflects the challenging conditions in franchised automotive retail volumes and margins, as well as weaker than expected April performance in AHG's Refrigerated Logistics division on the back of subdued Easter trading," the group said today in an announcement to the ASX.

"May and June are typically higher profitability months in the automotive retail sector and will have a significant bearing on AHG's FY2019 financial performance."

AHG added the end result could be impacted by a range of factors including evolving market conditions, consumer behaviour around the upcoming Australian Federal Election and any negative impact resulting from a review of its refrigerated logistics business.

AHG believes the review could lead to write-downs in the carrying value of receivables, which may have a bearing on the earnings outlook for this year but is unlikely to have a material impact on the balance sheet beyond FY19.

"AHG would not expect any of the above to impact the takeover bid from AP Eagers," the company clarified.

AP Eagers lifted its bid for the company last week to one share for every 3.6 shares in AHG, which has until this Friday to put out its target statement.

Yesterday AP Eagers announced it had lifted its stake in AHG from 51.3 per cent to just over 54 per cent.

Meanwhile, another group of investors comprising WFM Motors, NGP Investments and Sitil Management has lifted its stake from 28.8 per cent to 31.2 per cent. 

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