Shares in Auto Trader (LSE: AUTO), the online automotive marketplace, jumped over 7% on Thursday after the company reported higher first-half profit and revenue amid what it called “structural changes” in the new car market that are providing opportunities.
Auto Trader said in a trading update that its revenue rose 12% to £280.5 million in the six months to September 30, up from £249.8 million a year earlier. Pre-tax profit also climbed 10% to £162.8 million from £148.0 million.
The company declared an interim dividend of 3.2p per share, increased from 2.8p the year before. Auto Trader shares were up over 7% at 679.40p each by midday trading in London.
In the update, Auto Trader said the changes in the new car market “are providing opportunities for the group”. It has launched a new product allowing car manufacturers operating an agency sales model to advertise new cars directly to consumers on its platform.
Auto Trader also said it continues to integrate its new car leasing unit Autorama, which was acquired last year. It said Autorama has already yielded some cost savings and should benefit from volume growth when supply in the leasing market returns.
For the current 2023-24 financial year ending March 31, Auto Trader said it expects its operating profit margin to be consistent with the 59% achieved in the first half, compared to 60% in the same period last year.
Auto Trader Chief Executive Nathan Coe said: “We have made a good start to the year, against the backdrop of an increasingly uncertain economic environment, demonstrating the resilience of our marketplace model.”
He said the company continues to help its customers to digitalise their forecourts and showcase their vehicles “in the most effective way”.
Auto Trader shares have risen by around 30% so far in 2023, but remain up just 22% compared to 12 months ago.
The company has benefited from more people shopping for used cars online since the pandemic. However, the consumer economy continues to face growing headwinds from the cost-of-living crisis.
