Caffyns plc Returns to Profit Amid Challenging Market Conditions
Why we think this is neutral
While Caffyns has shown improvement by returning to profitability and increasing revenue, the outlook remains challenging. The company faces ongoing inflationary pressures and high interest rates, which are impacting both its cost base and customer confidence. Despite reducing net bank borrowings and maintaining adequate liquidity, cash was absorbed by operating activities this year. The modest growth in new and used car sales, coupled with stronger performance in aftersales, is encouraging but not transformative. The company's high PE ratio and mentions of a competitive landscape and economic uncertainty suggest caution is warranted. Overall, the positive steps taken are balanced against persistent market challenges.
Key Points
- Revenue increased by 5% to £275.5 million
- Profit before tax of £0.2 million, up from a loss of £1.5 million last year
- New car unit deliveries up 2%, used car sales up 1%
- Aftersales revenues increased by 8% to £30.7 million
- Net bank borrowings reduced to £8.5 million from £11.3 million
- Cash absorbed by operating activities was £0.3 million
- Final dividend of 5.0 pence per Ordinary share declared
- Ongoing challenges from inflationary pressures and high interest rates
- Trading conditions remain challenging in the early part of the current financial year
Summary
Caffyns plc has reported a return to profitability for the year ended 31 March 2025, with revenue up 5% to £275.5 million and a profit before tax of £0.2 million, compared to a loss of £1.5 million in the previous year. The company saw modest growth in new and used car sales, with new car unit deliveries up 2% and used car sales up 1%. A stronger performance was noted in aftersales, with revenues up 8% to £30.7 million. However, the company faces ongoing challenges, including inflationary pressures on its cost base and high interest rates impacting customer confidence. The company has reduced its net bank borrowings to £8.5 million and maintains adequate liquidity with £6.5 million in undrawn banking facilities. Looking ahead, Caffyns acknowledges that trading conditions remain challenging in the early part of the current financial year, with economic uncertainties persisting.