Corporate: Turners has found a way to make a $27m FY profit by selling... cars

Considering New Zealand’s smaller population you wouldn’t think it would be a strong car market. But you’d have been proven wrong this morning.

Dual-listed Turners Automotive Group (ASX/NZX: TRA) announced a Net Profit Before Tax of NZ$29 million ($27.4m). This came off the back of NZ$336.6m ($318m) in revenue and shareholders will enjoy a dividend of 5 cents per share.

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Turners also has subsidiaries finance and insurance, including Oxford Finance and Autosure. The car market is big for each of them and cars were responsible for 67 per cent of their revenue.

Five years ago, Turners was purely a car and machinery retailer before merging with Dorchester Pacific after Dorchester nearly went bankrupt in the aftermath of the global financial crisis.

Turners’ chairman Grant Baker credited the integration with the company’s success.

“We are seeing benefits from the company’s expanding retail network, a focus on better quality loans and simplification of the business model into core brands,” he said.

The company has 33 sites across New Zealand and intends to build more in the coming months. It is predicted there are 950,000 cars on Kiwi roads that are over 20 years old – 24 per cent of New Zealand vehicles. The average age of cars in New Zealand is 14 years, compared with 10 years in Australia.

Turners anticipates strong demand for used cars in the medium term and its brand name will be one of the key differentiating factors.

Another factor will be digital disruption in the industry with the increasing importance of online sales. Average car buyers now only visit two dealerships compared with five in years gone by. Turners noted one in five of its car loans are approved online and automatically through its system.

In its presentation this morning, Turners hinted at being open to making strategic investments in auto startups that “improved the way customer needs are met”.

One example it named was a “Netflix for cars” model; Carly, owned by Collaborate Corporation (ASX: CL8), is one such example.

Turners’ Australian shares were unchanged this morning.

In other ASX corporate news today

Rent.com.au (ASX: RNT) has announced a joint venture with Fair Go Finance to develop financial products for renters. The company’s core product, RentBond, helps renters pay for bonds in new property when waiting for refunds of old bonds. But while it is successful, CEO Greg Bader told shareholders this partnership will expand the product further.

The loan amount is now up to $10,000 and can fund moving costs as well as new furniture. The maximum term is 36 months when it was previously six.

Financial software provider Intiger (ASX: IAM) has provided an update to its shareholders this morning. While it believes the Financial Services Royal Commission will benefit it in the long term, it is hurting now. A pilot program for the company’s BOOM software ended last week but despite a positive performance, a follow-on deal could not be reached.

The company announced it is scaling back its overseas processing operations and seeking acquisitions or joint venture partners for operations. The stock fell 20 per cent in early trade.

The Health Employees Superannuation Trust became substantial holders in international payments company OFX Group (ASX: OFX). HEST already had 11 million shares at the start of this year but has bought another 1 million. It now holds a 5.02 per cent stake.