British motor retailer Caffyns reported a drop in pre-tax profits in its first half of trading even though it managed to grow revenue 1.3% on the previous year.
As of 30 September, pre-tax profits had slid to £682,000 despite the firm watching its revenue increase from £105.2m to £106.5m over the six month period.
Although new car sales dropped 7.4% on a like-for-like basis, Caffyns did manage to outperform the 11.7% fall in registrations seen in the national retail and small business market in which the firm operated.
Caffyns claimed that as new car sales targets had been reduced by manufacturers, it felt "confident" that the sector would likely improve moving forward.
In its used care business, which had already seen 30% like-for-like growth in the preceding three years, revenues grew 4.6%, despite a 1.4% nationwide decline in the sector.
Like-for-like after sales saw a 4.7% jump in revenue thanks to an improved level of customer retention, and Caffyns's parts business also showed slight growth as it moved 1.7% ahead of the prior year's figures.
Caffyns saw mixed results from its branded divisions as its Audi, SEAT and Skoda businesses delivered healthy profits, but its Volkswagen unit couldn't keep up, with new and used car sales dropping 7% and 3%, respectively.
Net bank borrowings expanded from £5.39m at the midway point of the previous financial year to £10.3m at the end of the current half.
Simon Caffyn, chief executive, said, "In a challenging trading environment, we have generated an underlying profit before tax of £0.74 million and finished the period with a stronger than anticipated September performance.
"It is encouraging for the second half that our manufacturer new car sales targets have been adjusted to take into account the reduced national new car market, providing an increased bonus potential," he added.
Earnings per share declined from 164.3p all the way to 19.1p.
As of 1630 GMT, shares
had recovered from earlier declines to sit 0.90% up on the day at 449.00p.