UK's Auto Trader shares hit record high as used car demand boosts profit

(Reuters) -Shares of UK's Auto Trader climbed more than 13% to a record high on Thursday after the company posted a bigger annual operating profit thanks to healthy demand for used cars.

The stock was set for its biggest one-day gain in two-and-a-half years and was the top gainer on London's blue-chip FTSE 100 index. They were last up 11.3% at 813.4 pence at 0803 GMT.

For the year ended March 31, Auto Trader reported a 26% jump in operating profit to 348.7 million pounds ($443 million), while revenue increased 14% to 570.9 million pounds.

High interest rates have prompted consumers to look for deals on second-hand cars instead of buying new ones.

"Demand is resilient with cars continuing to sell faster than before the pandemic and used car supply has gradually improved," the company said.

Average revenue per retailer, a key metric for the company, grew 12%, as customers bought additional products and services and Auto Trader expects it to grow in the financial year 2025.

"Despite softening car prices, overall, the car market has been strong for the group, and crucially, its operating margins continue to sit in the 70% range," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.

However, the new car retail market has been more challenging and discounting has started to return, Auto Trader added. ($1 = 0.7876 pounds)

(Reporting by Eva Mathews in Bengaluru; Editing by Savio D'Souza and Sohini Goswami)