McCarthy Limited increased its revenue by 15,4 per cent from R5,4 billion to R6,2 billion for the six months to December 2002 while the motor division reported its best performance ever for a July to December period.

McCarthy Limited increased its revenue by 15,4 per cent from R5,4 billion to R6,2 billion for the six months to December 2002 while the motor division reported its best performance ever for a July to December period.

Fully diluted headline earnings increased by 56,4 per cent to R80,5 million from R51,5 million in the comparative period last year.

Operating income before interest increased by 59,5 per cent to R188,3 million compared with R107,6 million in 2001, while the operating margin improved to 3,2 per cent up from 2,3 per cent in 2001. Income before tax and non-trading items increased by 73,9 per cent to R118,0 million from R67,9 million in 2001.

The motor franchise divisions produced record results, with income before tax increasing by 62,9 per cent to R123,1 million from R75,6 million in 2001.

“This has been a uniquely challenging time in the vehicle retail industry. Substantial increases in vehicle selling prices and four consecutive interest rate increases have undermined vehicle affordability, which has resulted in a softening in demand,” said chief executive Brand Pretorius.

“Furthermore, the rationalisation of motor dealerships in line with the recently introduced new dealer network strategies by some vehicle manufacturers impacted on our profitability. Nonetheless, McCarthy management has made significant progress with our own strategic plans and these pleasing interim results highlight the success we have achieved.”

McCarthy said R204,4 million cash was generated from operations during the period under review offset by the working capital level increasing by R309,4 million. “This is as a result of the overall level of working capital being seasonally high in December due to the closure of vehicle manufacturing plants over the Christmas period and the level of new vehicle inventory held by the dealerships being increased to accommodate this.

“However, new vehicle inventories happened to be significantly lower at December 2001 due to restricted supply from some of the major manufacturers at the time. The average price of used vehicles increased some 33 per cent from December 2001, which increased the value of the group’s used vehicle stock holding materially.”

Proceeds from investment activities, derived largely from the RAG liquidation receipt, disposals and acquisitions of dealerships, property, plant and equipment, generated R121,1 million cash.