• Revenue: Increased 12% to $328 million, up from $293.4 million in the first half of 2024.
• Operating Profit: Increased 10% to $82.8 million, up from $75.2 million in the first half of 2024.
• Underlying EBITDA: Increased 20% to $26.2 million, up from $21.8 million in the first half of 2024.
• Net Profit After Tax: Increased 42% to $9.4 million, up from $6.6 million in the first half of 2024.
• Return on Sales: Increased from 4.2% to 5%.
• Net Bank Debt: Reduced by 36% to $24.2 million, down from $37.9 million as of June 30, 2024.
• Interim Dividend: $0.08 per share, fully franked, up from $0.03 per share in the first half of 2024.
• Inventory Reduction: Reduced by 5% or $7.8 million since June 30, 2024.
• eCommerce Sales Growth: Increased by 44% during the period.
• New Retail Unit Sales: Increased by 7%, outperforming the FCAI's reported 2% rise.
• Used Vehicle Sales: Increased by 10%, posting a record first half result.
• Cash on Hand: $20.8 million as of December 31, 2024, an increase of $8.6 million since June 30, 2024.
• EBITDA Margin: Returned to 8%.

• Warning! GuruFocus has detected 9 Warning Signs with ASX:MTO.

Release Date: February 27, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Motorcycle Holdings Ltd (ASX:MTO) reported a 12% increase in sales revenue, reaching $328 million, driven by both new and used retail vehicle sales.
• Operating profit increased by 10% to $82.8 million, showcasing effective cost management and operational efficiencies.
• The company announced an interim dividend of $0.08 per share, a significant increase from the previous year's $0.03 per share.
• Net profit after tax rose by 42% to $9.4 million, indicating strong financial performance.
• The company successfully reduced net bank debt by 36% to $24.2 million, reflecting improved capital management.

Negative Points

• The market experienced some softening demand due to interest rates and cost of living pressures, which could impact future sales.
• New vehicle margins have compressed as OEMs have caught up with supply, leading to potential challenges in maintaining profitability.
• The company faces ongoing challenges in managing inventory and aging stock effectively to optimize capital returns.
• There is a need for continued focus on cost management and operational efficiencies to sustain growth.
• The agricultural sector, a key market for off-road vehicles, shows mixed signals with some farmers deferring spending, which could affect sales.

Q & A Highlights

Q: Can you provide some color on the gross profit dynamics across different divisions, given the strong top-line growth? A: Michael Poynton, Chief Operating Officer: We observed stability in the Mojo and Cassons businesses due to stable exchange rates and sea freight costs. However, new vehicle margins have compressed as OEMs caught up with supply, leading to an oversupply situation. Used vehicle margins have held up relatively well, with only marginal declines.

Q: How should we think about the seasonal dynamics and future prospects for Mojo's business, especially with new model launches? A: Michael Poynton, Chief Operating Officer: The CF Moto brand has expanded significantly in the motorcycle segment, which was previously small. The introduction of new models has been successful, and we expect continued growth. The business is now less seasonal due to the increased focus on motorcycles, leading to more consistent results throughout the year.

Q: Are the positive trends from the first half expected to continue into the second half of the financial year? A: Matthew Wiesner, Chief Executive Officer: We are outperforming the market in retail and see opportunities to improve in the pre-owned space. We aim to enhance our eCommerce and digital channels, which have shown potential for growth. The maturing of brands like CF Moto also presents opportunities for continued success.

Q: How has the market share been affected by new model launches, and what impact has this had on gross profit margins? A: Michael Poynton, Chief Operating Officer: We have maintained our market share, with new models allowing us to enter new segments. A new side-by-side vehicle priced at $30,000 has been particularly successful, showing market acceptance and contributing positively to gross profit margins.

Q: What are the company's strategies for cost management and operational efficiency improvements? A: Matthew Wiesner, Chief Executive Officer: We are optimizing property usage, focusing on labor sales efficiency, and improving lead management to enhance conversion rates. These initiatives aim to reduce costs and improve operational efficiency, with more updates expected as we finalize our strategies.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.