The Colonial Motor Company (NZX:CMO) increased shareholder profit, lifted its annual dividend and sharply reduced borrowings and inventory in 2026. The New Zealand automotive group is entering a more difficult trading period, however, with price pressure, new-brand competition and a chair transition ahead.
- Revenue rose to NZ$1.070 billion
- Trading profit after tax increased to NZ$18.665 million
- Annual dividend lifted to 40 cents per share
- Bank borrowings and inventory fell materially
- Ashley Waugh will retire as chair in November
Profit growth arrives with a stronger balance sheet
CMC finished the year with a useful combination for shareholders: higher earnings, a larger dividend and considerably less capital tied up in the business. Revenue reached NZ$1.070 billion for the year ended 30 June 2026, while trading profit after tax rose to NZ$18.665 million from NZ$17.831 million. Profit attributable to shareholders increased to NZ$19.871 million from NZ$18.343 million.
The improvement was not dramatic at the margin. Trading margin eased to 1.7% from 1.8%, and the company said the final quarter was subdued by the Middle East conflict, an oil shock and supply disruptions. But cash generation strengthened: operating cash flow rose to NZ$85.936 million from NZ$45.305 million, helping CMC reduce bank borrowings from NZ$70.7 million to NZ$21.7 million and vehicle floorplan finance from NZ$92.5 million to NZ$72.3 million.
Dividend rises as vehicle stock is cleared
The annual dividend will increase to 40 cents per share, up from 35 cents, including a fully imputed 25-cent final dividend declared for payment on 5 October 2026. The distribution represents 70% of trading profit after tax, at the upper end of CMC’s stated 60% to 70% payout policy.
Inventory fell by NZ$53.7 million to NZ$188.4 million, with the largest reduction in vehicles. Management said it had revalued used stock quickly after demand weakened, particularly for large diesel vehicles. That decision reduced the risk of carrying ageing stock, but came with short-term pain as market prices moved against the group.
BYD expansion meets a crowded showroom floor
CMC is responding to the industry’s structural shift towards new energy vehicles while maintaining its long-standing Ford and Mazda relationships. The group has expanded its BYD representation and is developing a purpose-built, solar-powered Christchurch dealership in Hornby, alongside supporting facilities largely on company-owned property. Ford Signature 2.0 upgrades are also planned for facilities in Rangiora and Botany.
That expansion sits against an unusually competitive market. CMC said more than a dozen Chinese automotive brands had entered New Zealand in the past two years, bringing aggressive market-share ambitions and a growing range of electric and hybrid vehicles. The company expects established brands to retain a reputational advantage, but only if their product ranges and pricing keep pace.
First-half pressure and board transition ahead
CMC expects a challenging first half, with continued margin pressure in both new and used light vehicles as price volatility and the volume of vehicles entering New Zealand weigh on trading. The group sees more encouraging signs in truck replacement demand and expects its tractor business to remain solid, supported by rural conditions. Southpac Trucks will also manage the transition to the next-generation DAF range, while JAC’s light-truck operation is still building momentum.
The annual meeting on 6 November will add a governance question to the operating agenda. Chair Ashley Waugh will retire at its conclusion after joining the board in 2015 and becoming chair in 2021, with the board then set to elect a successor. Graeme Gibbons and Stuart Gibbons are seeking re-election, while Grant Thornton’s continuing appointment as auditor will also go to shareholders.
Bottom Line?
CMC has bought itself financial breathing room, but the next test is whether lower inventory and debt can offset thinner margins in an increasingly crowded vehicle market.
Questions in the middle?
- Can CMC preserve its 70% payout while funding BYD expansion and dealership upgrades?
- How quickly will new-brand competition translate into lower vehicle margins and further used-stock revaluations?
- Who will become chair after Ashley Waugh’s retirement, and what will that mean for capital allocation and franchise strategy?