Auto Trader's pre-tax profits and revenue both reversed by almost £100m during its latest financial year, according to newly released figures. However, it added the continued shift to online automotive retailing made the company well placed for future growth.
The Manchester-headquartered company has reported a revenue of £262.8m for the 12 months to March 31, 2020, down 29% from the £368.9m it achieved in the prior year.
Its trade revenue was also down 31% from £324.3m to £225.2m as a result of a decision to provide free advertising to its retailer customers in April, May, December and February and at a discounted rate in June.
Auto Trader said the move "has improved our standing with customers and the strength with which we have emerged from the most recent lockdown restrictions".
The company's pre-tax profits fell 37% from £251.5m to £157.4m while its operating profit dropped by almost the same percentage, from £258.9m to £161.2m.
In a statement issued to the London Stock Exchange, Auto Trader added that it furloughed approximately 25% of its employees for almost seven weeks but "reversed this as soon as we had confidence that we would return to profitability".
The business returned all the funds received under the furlough scheme and has made all tax payments deferred at the end of the previous financial year.
Chief executive Nathan Coe said: "We decided early on to proactively support our people, car buyers and our customers, many of whom run small family-owned businesses. These actions have positioned us for a strong start to this next financial year.
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"There has been a dramatic shift towards buying online which means we now have more buyers than ever turning to Auto Trader to help with their next car purchase, making us even more relevant to retailers and manufacturers.
"This positions us ideally to enable the buying and selling of cars online, which will materially improve the car buying experience and the business of our customers.
"I want to thank everyone who has trusted and relied on us, particularly my Auto Trader colleagues who have shown unwavering commitment under the toughest of circumstances.
"Together our collective efforts have built the strongest of foundations to support the industry in transitioning to true multi-channel retailing underpinned by technology."
On its future, the company added: "Auto Trader has started the new financial year in a strong position as a result of the actions taken in the last year.
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"This is reflected in our recent trading performance, a strong pipeline of product innovations and improved relationships with customers. In the longer term, we will be beneficiaries of the major changes underway in the car retailing market, where more of the buying journey is moving online.
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"Despite unusually strong demand and tight supply, Covid-19 is currently having little impact on the financial performance of the business as we start financial year 2022.
"However, as seen in other countries, we cannot yet be sure that Covid-19 will not reappear as a significant negative factor in our future performance.
"The following remarks assume no significant restrictions on our retailers' ability to trade going forward.
"In the year ahead, we expect to deliver high single digit growth on FY20 ARPR and operating profit margins that are in line with FY20 levels, with FY20 being the year ended March 2020.
"As we started the year, we successfully executed our annual pricing event in April 2021 including the launch of retailer stores, which offers customers their own dedicated, customisable location on Auto Trader.
"Retailer numbers for the year are likely to be in line with FY20 levels and stock is still expected to be a small headwind.
"Consumer services and manufacturer and agency revenue, which make up 14% of group revenue, will recover from FY21 lows, but are unlikely to reach FY20 levels, as sellers favour part-exchange and new car advertising is impacted by semiconductor supply issues.
"The board is confident for the future prospects of the business."