Why Did Caffyns Record a £1.72m Pre‑Tax Loss Amid Falling New Car Sales?

Overview of Caffyns' 2025/26 Financial Results

Caffyns Group Ltd announced a pre‑tax loss of £1.72 million for the 12 months ending 31 March 2026, reversing a modest profit of £246,000 recorded in the previous year. The full set of results was published on the London Stock Exchange on 19 June.

Turnover and Segment Performance

Group turnover slipped by roughly 2%, falling to £270.66 million. The decline was driven primarily by a sharp 11% year‑on‑year reduction in new‑car deliveries. By contrast, after‑sales revenue grew 6% to £32.7 million, providing a modest cushion to the overall revenue dip.

Used‑car sales delivered a small bright spot, expanding by 4% over the year. Despite this growth, senior management indicated that further actions are required to boost order intake and contain costs.

Profitability Metrics

Underlying EBITDA contracted by more than a third, falling from £5.64 million to £3.61 million. The earnings pressure reflects both the lower volume of new‑car sales and rising operating expenses.

Cost Pressures and Balance‑Sheet Strength

CEO Simon Caffyn attributed the challenging trading environment to several macro‑economic factors, including persistent inflation, higher wage bills, escalating energy costs and rising interest rates. In addition, increased National Living Wage and National Minimum Wage rates added to the cost base.

Even with the profitability squeeze, Caffyns' balance sheet remained relatively robust. Net bank borrowings fell from £8.5 million to £7.3 million, while cash balances rose to £4.6 million. The group also ended the period with £6.5 million of undrawn banking facilities, providing flexibility for future investment.

Shareholder Returns

Despite posting a loss, Caffyns continued to pay an ordinary dividend of £273,000, equivalent to 10 pence per share, demonstrating a commitment to returning capital to shareholders.

Strategic Outlook

Simon Caffyn highlighted that the forward‑order book for new cars remains steady, although early‑year trading conditions have stayed challenging. He expressed confidence in the company's prospects and said the firm is positioned to capitalise on forthcoming business opportunities.

Key Takeaways for Dealers and Investors

• New‑car volumes are the primary driver of the recent loss, falling 11% YoY.
• Aftersales and used‑car segments are growing, but not enough to offset the new‑car shortfall.
• Cost pressures from inflation and wage increases continue to erode margins.
• The balance sheet remains healthy, with lower net borrowings and higher cash reserves.
• Management remains optimistic, citing a steady forward‑order book and planned cost‑containment measures.

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