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AHG looks for a stronger second half

Automotive Holdings Group chief executive Bronte Howson.

Automotive Holdings chief executive Bronte Howson attributed the performance not so much to a new car slump in its West Australian home market, but the effect of drought on its logistics business and ongoing investment.

Reported net profit edged up 1.1 per cent to $38.4 million on a 7 per cent revenue surge to $2.31bn. In what one manager dubbed a "tale of two divisions", dealership EBITDA notched up 11.5 per cent to $64m, while logistics earnings slumped 14 per cent to $25m.

While overall calendar 2013 car sales were a record 1.136 million units, Mr Bronte said the industry faced a number of disruptions, including the pre-election uncertainty about the tax status of novated leasing.

The mining investment slump also affected industry-wide car sales in WA, although "surprisingly" this didn't affect the company's own dealers. "The automotive side had a great result considering the challenges we had through the half," Mr Howson said. "We are looking at a stronger performance from automotive in the second half and logistics upside as well."

Mr Howson said he did not regret the company's heavy investment in cold storage capacity for its transport arm, based on its Rand, Harris and Toll Refrigerated operations. But he said capex "wasn't the greatest timing in the world", given ongoing drought in the Riverina and earlier Queensland and NSW floods affected fresh produce cartage volumes.

With 87 dealerships covering 22 makes, Automotive Holdings is in a prime position to assess the effect of Ford, Holden and Toyota ceasing local car making. Mr Howson said while overall sales were unlikely to be affected, market shares would realign according to the strength of the imported replacements.