Constellation Automotive Group, the company that owns Cinch and WeBuyAnyCar, has reported a significant increase in losses for the latest financial year. The company recorded a pre-tax loss of £140.7m, compared to a profit of £34.3m the previous year. This loss can be attributed to a drop in revenue from £8.315bn to £6.961bn, a decrease of 16%. After taking into account income tax, the company’s post-tax deficit has deepened to £103.9m. Adjusted Ebitda also saw a decline of 40.1%, falling from £336.3m to £201.6m.
In their report, Constellation cited challenging market conditions as the reason for their underperformance. They explained that the scarcity of vehicle volumes in the market had a significant impact on their activity and profitability. The ongoing war in Ukraine and its implications on the supply chain of new vehicles, as well as increased energy prices, high inflation, and rising interest rates, further added to their challenges.
Despite these setbacks, Constellation ended the year with liquidity of £271.4m, up from £247.1m the previous year. They attributed this increase to a reduction in inventory holding and actions taken following a property review. The company also mentioned that their UK vehicle remarketing division underperformed, with adjusted Ebitda down by 36.4% and revenue up by 11.8%.
WeBuyAnyCar, a subsidiary of Constellation, provided 491,000 vehicles for auction customers. However, the remarketing division operated at a reduced capacity for the majority of the financial year, impacting their efficiency and profitability. Auction volumes also fell by 15%.
The cost-of-living crisis and disruptions to the supply chain further affected Constellation’s operations. The demand for retail-ready vehicles slowed, leading to excess refurbishment capacity and unabsorbed production overheads. Additionally, the chosen vehicles for refurbishment became less favourable due to market demand and consumer preferences. The company also faced higher costs despite lower auction volumes.
Despite these challenges, WeBuyAnyCar saw a significant increase in revenues, with a growth of 152.2% to £2,119.3m. However, the average revenue per vehicle fell from £9,100 to £7,100.
The highest-paid director at Constellation earned £1.2m for the year, a decrease of 71% compared to the previous year. The company ended the financial year with net cash and cash equivalents of £96.4m.
In conclusion, Constellation Automotive Group faced significant losses in the latest financial year due to challenging market conditions and disruptions in the supply chain. However, they managed to maintain liquidity and saw growth in certain divisions, such as WeBuyAnyCar. The company will need to adapt to the changing market conditions and focus on right-sizing their operations to improve profitability in the future.
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