Hedin Automotive, a subsidiary of Sweden-based Hedin Mobility Group, has recorded a loss-making performance in its latest trading statement.
Performance was impacted due to several factors including the general economic slowdown which reduced demand, the introduction of the agency sale model and a two-week closure period for staff training on a new Dealer Management System due to economic challenges, a shift to the agency business model.
In addition, the insolvency of the company’s largest debtor which required a bad debt provision of £2 million, further hit profitability.
Hedin Automotive, a subsidiary of Sweden-based Hedin Mobility Group, has recorded a loss-making performance in its latest trading statement.
Performance was impacted due to several factors including the general economic slowdown which reduced demand, the introduction of the agency sale model and a two-week closure period for staff training on a new Dealer Management System due to economic challenges, a shift to the agency business model.
In addition, the insolvency of the company’s largest debtor which required a bad debt provision of £2 million, further hit profitability.
“2023 was a challenging year for us due to the economic climate, our business model transition, and unexpected financial setbacks. However, we remain confident that our strategic investments will yield positive results in the long run,” said chief executive Anders Hedin.
For the year ended 31 December 2023, Hedin Automotive reported turnover of £211.5m, with a gross profit of £31.6m. However, operating losses totalled £4.06m, with pretax losses of £7.6m. EBITDA saw losses of £1.4m. Net assets were valued at £4.76m.
“As we move into 2024, we anticipate more stability despite the prevailing economic uncertainties. While we have faced significant operational and financial hurdles, we believe the foundations are now in place for a stronger performance in 2024,” said Hedin.
Hedin Automotive’s 2024 outlook is more optimistic, with the company reporting stronger sales volumes across all areas. The group has also completed a comprehensive cost review, which is expected to reduce the cost base moving forward.
“Although there will be initial costs tied to realigning our cost base, we expect to return to profitability by the end of 2024,” the chief executive said.
Hedin Automotive said it will continue to invest in upgrading its facilities including its BMW and Mini Ruxley facility, with the project scheduled for completion by September.
“We remain committed to building a strong, customer-centric business that continues to evolve in line with the automotive industry’s needs,” said Hedin. “Despite the turbulent economic environment, we are optimistic about our prospects for the year ahead.”
The group’s strategy throughout 2023 focused on expanding its market footprint. In April of that year, Hedin Automotive acquired four Mercedes-Benz businesses from Mercedes-Benz Retail Group UK, marking a significant step in Hedin’s expansion into the UK market.
Later that year, Hedin bolstered its presence by acquiring BMW retailer group Stephen James Alliance.
“The acquisition of Stephen James’ operations follows our earlier purchase of Mercedes-Benz Retail Group and further strengthens our foothold in the UK,” said chief executive Anders Hedin. “We see this as a critical move in establishing a premium motor retail business in the UK that is poised for further growth.”
In 2022, the dealership group withdrew a £411m takeover offer for Pendragon, citing “challenging economic conditions”.
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