KEY POINTS:
Shares in Turners Auctions surged yesterday despite the company announcing a 26 per cent drop in full-year profits.
Turners shares opened 7c higher yesterday and continued to rise after it reported a full-year net profit of $2.3 million, down from $3.1 million in the previous year. Shares eventually closed at $1.10, up 13c.
Fraud by a former employee, who has pleaded guilty in court, bit into profits. The total impact of this was quantified by the company at $2.8 million over seven years. Without that, the company's net surplus would be $2.9 million, down 6 per cent from 2006.
Operating profits were up 13 per cent to $85.3 million.
Despite a declining market for used cars, auction sales remained stable at 71,000 units. Volumes lost from the collapse of finance companies such as Provincial Finance and Western Bay Finance have been replaced with new finance company business.
Chief executive Graham Roberts said the outlook for the company, while challenging, held some positives. Its biggest Auckland competitor, Hammer Auctions, closed last October, and there was a glut of pre-2000 Japanese imports brought in before the new vehicle emissions regulations came into force.
"A lot of people are going to get the stock down in New Zealand. They realise they don't have a niche and they're going to need to cash up. I think we're a pretty good place to do that."
Its online auction site, Turners Live, has experienced a doubling in growth, with 18 per cent of the company's sales taking place online last year.
One analyst who asked not be named said the results were better than anticipated. The company continued to trade in a challenging environment, but that was mitigated by a drop in competition.
A final fully imputed dividend of 4.7c was declared.
