Aramis group: A shortage of new cars is pushing Aramis Group’s accounts into the red

(BFM Bourse) – The company ends its financial year with a loss for the first time in 20 years. For 2022/2023, the used car specialist admits there is “limited” visibility in its markets due to the complex economic and geopolitical environment.

Aramis Group stands and not a little. The used car specialist fell on the Paris Stock Exchange after posting downgraded half-year results. The group headed by Guillaume Paoli has actually announced a loss for the 2021/2022 financial year (which ended in September).

“This is the first year in 20 years that we have temporarily suffered from a lack of new vehicles,” Guillaume Paoli told BFM Business. Investors are sanctioning this slide in annual accounts: the title fell more than 8% to €4.32 at 10:20 this Friday.

However, the level of activity demonstrated by the Val-de-Marne group (headquartered in Arcueil) increased sharply by 40% in one year compared to the 2020-2021 financial year. Thus, the annual turnover is 1.768 billion euros, which exceeds the group’s own expectations, which hoped for sales of 1.7 billion euros in the last financial year.

The company cites demand from private individuals for mechanical transmission of refurbished cars, a segment where Aramis posted a more than 90% increase in turnover in published data. “Everything is going well in the refurbished car segment, as we have achieved an increase of more than 38% in volumes for private customers. The price effect also contributed to the increase in turnover,” explains Guillaume Paoli.

In the pre-registered car segment, sales to individuals fell by about 50% year-on-year, according to published data. The supply crisis in the automotive sector has led to a shortage of low-mileage cars (such as show cars from dealers), “In our other activity, cars with zero kilometers, therefore very new cars, the market has completely disappeared,” emphasizes Guillaume Paoli.

Margins that still do not follow the dynamics of sales

This “extremely challenging” market environment also led Aramis to lower its adjusted EBITDA margin target in April, which was then expected to be “well below” the already paltry 1.5% of turnover previously targeted. . Gross margin at the end of September was 175.1 million euros, down 5.5% from 1.2% in published data compared to fiscal 2021.

Adjusted EBITDA (gross operating surplus) was in line with the company’s expectations and amounted to -10.7 million euros as of September 30, 2022. “The decline in profitability compared to FY 2021 is the result of erosion of GPU (gross margin per unit, generated per vehicle to individuals) and due to a very sharp decline in sales of pre-registered vehicles of the groups, which did not allow good absorption of commercial, general and administrative funds. (SG&A) expenses,” Aramis Group explained in a press release Thursday.

The lack of pre-registered cars therefore pushed Aramis Group’s accounts into the red. The group recorded an annual loss of €60.2 million after posting a positive net result of €3.3 million in 2020/2021, a sharp 36% decline compared to 2019/2020.

“Limited” visibility

Due to the macroeconomic, geopolitical and sectoral environment, Aramis Group acknowledges that it has “limited” visibility in its markets. In 2023, the pre-registered car segment will still depend on the semiconductor crisis and the conflict in Ukraine. These factors affect supply chains and the speed of standardization of new car production. However, Aramis Group’s ability to obtain supplies of these types of vehicles depends on it.

In the renewed car segment, Aramis Group warns that demand is gradually “more affected by the decline in household consumption in Europe in the context of marked inflation”.

In terms of the quantitative forecast for 2023, Aramis Group expects a gradual improvement in adjusted Ebitda during the year, excluding positive organic growth in the volume of refurbished vehicles sold to individuals and restructuring costs that “prevent further deterioration of the macroeconomic environment”.

This new edition has investors once again doubting the real potential of the Aramis model. The group is certainly a past master in the art of meeting and then exceeding its business forecasts several times over, but its profitability has been in the opposite direction. The accounts and outlook, released Thursday evening after the stock market, fueled the headline decline on Friday, which had already seen a disastrous stock market performance. After the IPO in June 2021, Aramis Group accumulated a loss of more than 80% compared to the IPO price set at 23 euros.

Sabrina Sadgui – ©2022 BFM Bourse

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