ASX shares in the automotive sector including Bapcor Ltd (ASX: BAP) and Carsales.Com Ltd (ASX: CAR) have been big winners amidst COVID-19. Current market conditions have seen a reallocation of consumer spending driven by travel restrictions, a change in personal transport choices and an increase in flexible work arrangements.
Despite the tailwinds, the Eagers Automotive Ltd (ASX: APE) share price plummeted 10% in early trade today, following the company's release of its FY20 results and CEO succession.
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CEO succession
After 16 years as CEO, Martin Ward will transition from his current position to a new role as advisor to the board and CEO.
Current chief operating officer Keith Thornton has been appointed chief executive officer, effective today. Mr Thornton has been with the company for 18 years, including his role as COO since 2017.
The company has described the transition as "natural" and "many years in the making".
FY20 highlights
In today's results, Eagers reported an increase in statutory revenue to $8,749.7 million compared to $5,817 million in FY19. This reflects the first full year trading for the enlarged company following the merger with Automotive Holdings Group Ltd.
Earnings before interest, tax, depreciation, amortisation and impairment (EBITAI) from continuing operations increased 82.7% to $625.5 million. While underlying profit after tax increased by 102% to $140.4 million.
The company pointed to the strong growth in new vehicle market share and stronger truck retailing performance, demonstrating its significant national footprint.
Elsewhere, pre-owned vehicle strategy delivered strong year-on-year growth with the last 7 months delivering profit together with enhanced customer offerings including click and collect and online finance.
Vehicle sales also rebounded strongly from historical lows experienced during April and May 2020 when COVID-19 restrictions were nationwide. The company cites that customer orders have continued to their strong trajectory, and supply constraints caused by global manufacturer closures and reduced production capacity have started to ease.
Eagers share price slumps despite strong results
It appears that reporting companies across the board are struggling to impress investors this morning. Reporting companies, including Appen Ltd (ASX: APX), Humm Group Ltd (ASX: HUM) and Nanosonics Ltd (ASX: NAN), have all slumped lower following half and full-year results.
Looking ahead, the company believes it is well-positioned to withstand any further short term and localised COVID-19 related impacts. Its current order book is strong but notes that ongoing COVID-19 uncertainty calls for some caution on outlook.
After sinking to an intraday low of $11.70 in early trade today, the Eagers share price has gained some ground and is trading at $12.40 at the time of writing, down 6.7%.
