Shares of Auto Trader Group PLC (LON: AUTO) trade in a volatile manner today after the company removed its interim dividend amid fresh lockdown measures.
The online car reseller reported that its revenue plunged by 37% to £118.2 million for six months ending September 30. Profit before tax fell by 48% to £66.2 million as generates cash levels halved to £66.1 million.
Following fresh lockdowns and seasonality, Auto Trader decided to offer free advertising packages for December for “all retailer customers in the UK and to extend payment terms by a month for November services.”
“The recent government announcement once again restricts our customers’ ability to meaningfully trade. As we have announced today, we remain committed to supporting our retailer partners by making our advertising packages free for the month of December and extending payment terms by a month for November services,” Nathan Coe, CEO of Auto Trade, said.
Free advertising packages were also made available in April and May, which yielded a £5m-7m operating loss for each month.
“The demand for cars has been strong since early June, with consumer demand on Auto Trader consistently being 20% or more above prior year levels. We believe car retailers will be allowed to operate both home delivery and click & collect services and we expect consumer activity that we have seen through October and into November will sustain some sales,” the company said in a statement.
Auto Trader share price initially gapped about 2% lower as the interim dividend was scrapped. However, the price action then rallied to print 597.4, the highest it traded since February this year.
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