Pendragon PLC (LON:PDG) said its quarterly profit almost entirely offset the first-half losses caused by COVID-19 disruptions.
In the three months to September 30, underlying profit before tax came in at £27.3mln, while the first half recorded a £31mln loss.
The car retailer said the franchised UK motor division performed ahead of expectations in the quarter, with the performance driven by actions taken to address stock profiles, improve profit per unit, close underperforming stores and reduce the overall cost base of the group.
Second-hand residual values were also better than expected.
New vehicle revenue dipped 1%, in line with the overall market which was down 0.5%, while used vehicle revenue was flat.
Closing net debt at the end of September was £26.9mln, down from £46mln at the end of June.
Analysts at Liberum raised the target price to 12p from 8p but maintained the ‘hold’ recommendation.
“Pendragon has delivered a strong third-quarter profit before tax, ahead of our expectations,” the broker noted.
“The shape of the numbers was not what we expected, with lower sales and stronger margins, but this is a creditable performance, given the legacy issues.”
Shares motored 10% higher to 11.64p on Thursday morning.