PROFITS at Arnold Clark have topped £110 million as the car dealing giant posted record turnover last year, powered by “exceptional growth” in used vehicle sales.
Glasgow-based Arnold Clark saw revenue soar to £3.35 billion car sales surged by 10.8 per cent to 175,526 units in 2015, accounts newly available at Companies House show.
According to the accounts the business, established by industry veteran Sir Arnold Clark in 1954, made a pre-tax profit of £110.4m last year, up from £108m the year in 2014.
Sir Arnold notes in the accounts that the growth was partly driven by a spate of showroom openings, which included the acquisition of Ness Motors, comprising more than 100 members of staff across operations in Inverness, Perth and Elgin.
The company also acquired Vauxhall dealerships in West Calder and East Kilbride, while adding numerous sites to its estate through acquisitions south of the Border. These included companies in Preston, the West Midlands, Benton (Newcastle), and Burton on Trent.
It also launched what is understood to be the UK’s largest ever Renault showroom at an eleven-acre site in Hillington, near Glasgow Airport. The premises, which houses more than 400 new and used cars, became home to the company’s head office in April. Around 500 staff work at the base.
However, site acquisitions only accounted for part of the sales growth, with Sir Arnold noting in his chairman’s statement that like for like sales jumped by 7.9 per cent in the year ended December 31.
In spite of surging used car sales, though, the company saw new car sales slide by 8.4 per cent to 83,813 units. This was down largely to a major fleet contract not being renewed.
Sir Arnold notes in the accounts: “Used car sales increased by 10.8 per cent due to the opening of new branches and like for like sales increasing by 7.9 per cent. This increase in used units, combined with strong residual values and continued low interest rates, were the main drivers of the increase in operating profits.
“New car sales fell by 8.4 per cent due to a large fleet contract that was not renewed in the year due to significant levels of working capital required to operate the arrangement.
“New retail units increased by a modest 0.4 per cent in what was a relatively static UK market, and it is expected that 2016 will experience similar levels of growth.”
Arnold Clark Finance, the company’s vehicle management and daily rentals business, made a “significant contribution to group profits” during the year, although pre-tax profits dropped by 3.8 per cent at the division to £15.5m. This was attributed by the company to the exceptional year experienced by its daily rental business the year before, boosted in part by major sporting events taking place in Scotland, which included the Commonwealth Games and Ryder Cup.
According to the accounts, Arnold Clark Finance posted a 10.7 per cent increase in turnover to £559.2m.
An ordinary dividend of £3.75m was paid during the year, with the directors recommending that no final dividend is made. An interim dividend of £2.5m had been declared prior to the accounts being signed off.
Mulling the outlook for the current year, Sir Arnold said: “In 2016 we expect that the new car market will remain relatively static, with used cars experiencing similar growth to 2015.
“Funding remains in place to take advantage of any opportunities that may arise and to overcome any market volatility.
“Early trading results have been very promising and our strategic objectives remain unchanged: namely, focusing on customer experience, product availability and widening the geographic footprint of the group.”
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