Result for the six months to 31 December 2023

THE COLONIAL MOTOR COMPANY LIMITED

Unaudited results for the six months ended 31 December 2022

Trading Profit after tax at $9.1m, down 35.9% on the same prior year period

Interim Dividend unchanged at 15cps

Trading Results
Trading profit after tax of $9.1m for the first half of the 2024 financial year was below the comparative period’s very strong result.

Dividend
The Board has declared a fully imputed interim dividend of 15 cents per share. The dividend will be paid on 25 March, with a Record Date of 15 March.

Trading Conditions
As we reported to Shareholders and the market in the most recent guidance issued on 18 January 2024, the prior Government’s clean car legislation had significant distorting impacts on the new vehicle market. The current Government’s telegraphed and welcome decision to cease the Clean Car 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. Conversely, the heavy truck market was up 7% on the prior year.

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.

Property Developments
The rebuild of Agricentre’s tractor dealership in Gore has been completed. Post the end of the half year, we also acquired a very desirable property 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.

Outlook
Although our 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.

South Auckland Dealership Tour
Shareholders are invited to a tour of the South Auckland Motors, Southern Autos and Southpac Trucks dealerships in Manukau on Friday the 5th of July 2024. Please RSVP to cmc@colmotor.co.nz by the 7th of June if you would like to attend.

Annual Meeting
The 2024 Annual Meeting is scheduled to be held in Wellington at the Harbourside Function Venue at midday on the 8th of November.