March 18, 2020 / 8:56 AM / 15 days ago

UPDATE 1-Pendragon shares plunge as results disappoint, warns virus spread may hurt

(Adds shares, CEO comment, background)

March 18 (Reuters) - British auto retailer Pendragon on Wednesday warned the coronavirus’ spread in the UK could reduce footfall and affect financial performance, as it posted an annual loss, sending shares to their lowest in nearly 11 years.

The company, which operates the Evans Halshaw, Stratstone, Quickco and Car Store brands, said it was delaying its capital expenditure programme and would make decisions depending on market conditions. It, however, added that it was too early to quantify the virus’ impact.

“In a situation like this, (Chief Financial Officer) Mark Willis and I have to be able to make sure we’ve got a strong balance sheet and we can weather the storm,” newly appointed Chief Executive Officer Bill Berman told Reuters on a call.

Pendragon posted a pretax loss of 16.4 million pounds ($19.74 million) for the year ended Dec. 31, compared with a profit of 47.8 million in 2018, mainly due to poor performance in the first half.

Shares of the company fell as much as 33% to their lowest since March 2009.

In September, Pendragon scrapped its dividend after deep price cuts to offload used car inventory led to a first-half loss. Last year was a transition for the company amid challenging market conditions, however, Pendragon returned to profitability in the second half, Berman said in a statement.

Demand for cars suffered in 2019 due to the uncertainty related to Brexit and worsened in the run-up to the December general election, Pendragon said in January, as the auto retail industry struggled with rising labour costs, weaker demand and a squeeze on margins.

“We remain cautious given the ongoing level of economic uncertainty post the UK’s exit from the EU,” the company said. ($1 = 0.8308 pounds) (Reporting by Yadarisa Shabong in Bengaluru; Editing by Amy Caren Daniel, Aditya Soni)

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