Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Managing Director and Chief Executive Officer, David Ahmet. Please go ahead.
Thanks very much, Maggie. Good morning, everybody. David Ahmet here, and I'd like to bring you MotorCycle Holdings financial results for the financial year 2024. I don't think there's any doubt that 2024 was a challenging year for our industry. It's very much a discretionary spend, and it was the year that we expected to have after COVID or once things normalized from the COVID influence. And certainly we expected the change, and it came along in 2024. I'd like to move in now to our financial summary, to give you some idea of overall. Despite a lessening of demand and despite certainly quite a marketplace, our sales were still up 1% to AUD 582 million.
On a like-for-like basis, we were down 4%, and to be honest, I expected that to be more. That's a better performance than I thought. Our gross profit was only down 2%, so AUD 149 million. So all very stable. Underlying EBITDA was down 18% to AUD 45 million, but profit after tax was down 39% to AUD 14 million for the year. Net assets rose 1% to AUD 200 million. The board has declared a final dividend of AUD 0.07 per share, fully franked, of course. And combined with the interim dividend of AUD 0.03, we'll pay a total dividend for 2024 of AUD 0.10 per share. Financial year 2024 saw a full year contribution from the Mojo acquisition.
That certainly has helped us to maintain the revenues for this year. The previous year was eight months' worth of Mojo compared to 12, obviously 24. We've been able to grow, you know, during the year, despite the difficult conditions, and I think that demonstrates the industry leadership and the strength of MTO's business model. We believe the business model is still correct. It's still the right one. There's certainly plenty of challenges and plenty of work to do. These challenging economic conditions are expected to continue into 2023, and it's certainly our indication is that the Federation Chamber of Automotive Industries indicates that it's very widespread in the motorcycle market. It's across all states. So, we've performed better than the total market, without a doubt, but it is down.
Our like-for-like operating expenses were up 3%, and I think that was a fairly good result given the huge demand that we've had for pay increases, particularly rents have all gone up, and then basically every expense the business has increased during the course of the year, and we've opened, you know, new dealerships. But, you know, to keep it at 3%, I'm not disappointed with that. It wasn't easy, though. Operational summary. During the year, we made a one-off investment in a new warehouse management system for Cassons, our wholesale accessory business. Basically, that, even though the times were demanding, we have to think about the future. And so this is a big investment in the future.
It's a new operating system, a new business-to-business system, and a new warehouse management system, all designed to improve efficiency, to get a better return, to allow more volumes in the future. So we bit the bullet, and we took our medicine last year in that business, and so far, the signs of having completed that are looking really positive. So I think it's given us the platform to continue the growth of our business. We also, even though things were tight, we opened two new dealerships. During the course of the year, I had the opportunity to acquire a Harley-Davidson dealership in Sydney, in the heart of Sydney, and that's not an opportunity that I'd be prepared to miss. Those businesses are usually very good.
So, we secured that business and opened the doors in March, so just a few months ago, so early days, but really good asset long term. Harley dealerships are our best performers, all the time. So good to put my foot on one of them. And also in order to help promote the CFMOTO brand, which is our wholesale new bike brand, we opened a new flagship store in Springwood, in Brisbane, to help promote and showcase the brand. So, again, investing in the future, investing in other aspects of the business through our retail business. Also, one of the highlights of the year, I think, is we've finally got our accessory online sales happening. We've had a massive increase in online sales during the year.
We've got expert advice, and we've worked, and it's working for us, and we expect that to keep growing quite rapidly. Something like 200% growth for the year, which is coming from, I guess, a relatively low base, but, you know, becoming meaningful to the business now. Let's see, what else? We had overheads were the name of the game to the half. Big expenses were really difficult. We kept them to a minimum. Our wages, we've kept tight. You know, we've kept them stable or lower. But we had things like bank interest well up. We've had floor plan interest much higher. Insurance, every expense that you can imagine has had a significant increase.
For us to keep the interest to such a low figure, 3%, I think is doing quite well. We're lean. We've got the business lean for 2025 . We tackled this year with having removed any excess, so hopefully, that will help underpin a better result for this year. Okay, let's have a look. Let's talk about our profit result. As I've mentioned, the total sales remained quite stable for the year. We had a full 12-month contribution from Mojo, compared to 8 months. Our gross profit also remained very stable, with a small decrease of just 3% to AUD 433 million, and an operating gross profit figure margin of 25.6%, as compared to the previous year of 26.3%.
Net profit, as I mentioned, was down 39% to AUD 14 million. I believe our performance was resilient, acknowledging that profit numbers are lower than 2023. It's a clear indication of difficult economic environment in which we're operating in, and it reflects the broader economic uncertainties both within Australia and globally. But certainly, we're seeing similar declines in the motorcycle market in Europe and U.S. On a like-for-like basis, which tells you how we're going, you know, with the existing business. Now, for like-for-like, you take out the Mojo importing business. We've taken out Team Moto Townsville, which is a new acquisition, CFMOTO Springwood, and of course, the Morgan & Wacker Harley dealership in Sydney.
So if we take them out and strip them out, we come back to a gross operating profit down 7% to 120 million, operating margin of 26%. Underlying profit, EBITDA was 2.7% compared to 9.5%. Again, these numbers reiterate the stability of the declines that have flowed as a result of the operating environment, with an increased cost of doing business. We expect the full benefits of this cost management to flow, you know, further into 2025. If I reflect on 2024 for a second, we were, our profit was attacked from every avenue. Number one, sales were down. There weren't people who were buying, you know, the product as much as they were in previous years. That increased competition.
As the businesses got more desperate, they started discounting more to keep the machine going, so our margins got squeezed, and of course, we had a tremendous increase in operating expenses. So the bottom line was attacked from three angles, and we had to approach all three angles to try and get the business going in the right direction, which I think we have. Balance sheet-wise, our balance sheet's very stable. Total assets sit at 394, liabilities 194. This includes, I think they're up 1%, yeah, so AUD 200 million, balance sheet up 1%. Market value-wise, our basic earnings per share for 2024 was AUD 0.192.
We've paid a dividend of AUD 0.15 over the past twelve months, giving a yield of 15% and a price-to-earnings ratio of 5.2 at June 30. They're pretty interesting numbers, I think. Revenue growth. Our revenue has increased at a compound annual rate of 12% over five years. Just looking at the past and trying to get a bigger picture of the business, you know, over a five-year period, the compound growth is 12%. The trajectory has always been the same, probably been the same for thirty years. Every year, the revenue just keeps going up and the business gets bigger and stronger. EBITDA decreased to AUD 44.8 million from AUD 55.3 million. If you're looking at that graph there, underlying EBITDA, again, we've got four years there.
And if you look at that, you think, well, okay, the previous years were stronger, but of course, you know, there was some assistance from JobKeeper in 2022 and 2021. And if you take those figures out, you find 2024 would be in front of those years. So we're still performing quite strongly. You know, the business is still charging along and selling as much as it was before, if not more. Net profit-wise, again, you've 2021 and 2022, influenced by that JobKeeper figure, which was AUD 6 million assistance in those two years. So whilst, you know, we're disappointed with 2024, we believe the business is better than that. It certainly haven't fallen off a cliff or a great disaster.
We've handled the change that, you know, the change in the marketplace, and now we're looking for, you know, how to grow it from here. We believe we've got some very positive things to come. This is an interesting one, our diversified earnings. So that's a net profit 14.9, very disappointing. Diversified earnings, profit by department. These are the silos of where the money comes from, essentially, and they're actually all very quite different business, you know, within a business. New vehicles are very different to used, for example. But if we look at new vehicles to retail to begin with, our volume was actually up for the year, but you can see that our gross profit was down by 11%. That's a direct symptom of this increased competition and lowering demand.
So it's harder to sell bikes, fewer people buying them, so we give them more inducements to purchase. So that's a direct response to competing in a very, you know, competitive marketplace. New vehicles wholesale. Now, this is a really good figure, 23%. That's really exciting, particularly when you think about what we sell in new bikes wholesale, is mainly agricultural product. It's mainly the four-wheelers for the farmers. And that particular segment of the industry had a very tough 2023. It was down somewhere between 10% and 15%. However, with our gross profits up 23%. So our sales were down as well with that agricultural product, but what this reflects is the introduction of motorcycles to CFMOTO. And some of you might remember me talking about some new models coming with CFMOTO.
You know, one or two of them have arrived and had a tremendous impact on the business. It's lifted our volume, it's lifted our gross profit. So we've had, you know, of course, there's the eight-month and the 12 -month comparison as well. But besides that, CFMOTO has now launched itself into motorcycles, and that's very exciting. They're good bikes and, you know, they're virtually number one in Australia for their latest model, so very exciting to see such a good product. Used vehicles, 1% down for the year is pretty good, given the demand was so soft. We put a lot of work into used over the course of the year. Our margins did hold up quite well, so that's not a bad result at all.
Certainly second half, we're performing better than the first half. Certainly the last quarter did quite well. So big numbers, probably the best numbers for the year we've done in May, June. So if we look at parts, accessories, now, it's down 7%, and I think for a different reason. In the retail world, we've got more competition than what we had before. So that 7% decline, although disappointing, the business is out there, it's just that we've got some serious competitors there that we've got to share the business with. So I think given the circumstances, that's quite a good performance. So that's a matter of us rolling up our sleeves and competing harder and doing a better job in the future. Not too bad. Parts, accessories, wholesale, down 7% also.
No coincidence, they're not related, really. They're two different issues there. The wholesale business had major disruption during the course of the year, and they were, you know, we instigated those changes. We bought two small wholesale businesses where we had to go and pick up their stock and locate it into our warehouse. And of course, we did the complete business investment there, a major investment in software with the warehouse management and operating system, a full stock take of AUD 30 million worth of stock. A lot of disruption to that business during the course of the year, and if I look at the months where the profit was lower and compared to average, that's exactly where we impacted it with these new innovation that we put in.
However, it's complete, and the business is clean and sharp, and working much more efficiently than it was, and I certainly expect that figure to change for this year, and it has already. We've seen some really positive shifts since we completed that project. We've got some additional products there from these other smaller businesses we bought, so there's more, a better range of product, and we've picked up a good helmet brand out of Europe, which is substantial. So, we don't expect to see that 7% decline again. If the market were to remain similar in 2025, we would see a much better result, I believe. Service and repair are always consistent, down a little bit by 2%, and I think that's we got caught out there.
We've had wage increases there, substantial wage technical techs getting higher pay, mining industries trying to poach them from us. So we had to pay our techs more money, and we weren't quick enough to pass on that retail hourly rate. So we've done that now, of course, and that figure would look very differently. If you look at the last quarter, I believe we're up and not down. But for the year, 7% down gross profit, and that's certainly the wage increase there had the biggest impact. Service, oh, sorry, it's down 2%. It's not seven down, it's 2%, not seven, but very stable. It always is. We've booked up the workshops fully booked, you know, 52 weeks of the year. So it's just the margin of the issue.
Finance and insurance commission. I'm a bit disappointed with a 2% decline, so I don't think we were coming from a particularly high base. We need to do better. That's a performance within our business issue there. We're selling the motorcycles. You know, there were 25,000 opportunities last year as we sold bikes. So our penetration, it's stable, but we need it to creep up. We need to get that higher. It's usually in the early to mid-twenties, so I'm disappointed there. I think there is more profit in finance and insurance. We have to perform better. So there's more focus on that for this year.
If I look at our operational performance now, and we look at new motorcycles, that's the industry to the left, and you can see that the industry's had a fairly big hit 2 years ago, and in the last 12 months, it's gone down a little further. They're not particularly exciting numbers. I have seen these numbers much higher in the past, but to be honest, I thought the decrease was going to be more than 3%, but the last quarter kind of saved the industry, and they kicked up. It was down up to 10% early in the year. Having said that, we increased our volume by 5.4% for the year. Again, it's we keep outperforming the market.
We've grown our market share now to, I think it's 15.5% of the national market. So each year, we seem to keep increasing our market share, and that's because we're chasing that volume. It might be harder. We're working harder. It would not cost us a bit in margin, but we want to keep that volume happening because there are so many benefits from selling a new motorcycle. So it's the engine room of the retail business, really. So it's important to keep those things turning, even if you have to sacrifice some margin or invest further into marketing. But I believe that's the right direction, and certainly, there's quite a difference between 5.5% up and 3% down.
So we're doing a better job, I think, than the others, and everyone will be suffering from the margin compression. Used motorcycle units, again, you know, if we look at, you know, right up there with the very best of our years, under 10,000 units, we've only once sold more than that, which was two years ago, when used bikes and everything used was in huge demand. So I think that's a good figure. I think, and particularly the second half, you can see it's well up on the second half last year. So that's a great sign. So used bikes are going the right way. Margin compression has been only moderate, but with used bikes, they're certainly better than they were pre-COVID.
Not as good as they were in the middle of COVID, but somewhere between the two, so quite a reasonable margin, and we've got the volume happening. I'll talk a bit further about the retail business. Our retail dealerships showed solid sales performance despite weaker consumer discretionary spending. As I've mentioned, new unit sales were up by 5%, total retail sales up 4% combined. Retail parts, accessory sales declined 6%, which was offset in part by growth in online parts and accessories, which is obviously increasing that online business. During the financial year, we opened two new retail dealerships, so we're continuing to increase the size of our footprint. The twelve-month performance of the flagship in Springwood CFMOTO store exceeded expectations.
And CFMOTO and Morgan & Wacker, Harley-Davidson, was acquired in January, opened its doors in March. Demand weakened from November 2023 as a result of impacts of the increased interest rates, inflation, and cost of living. But it did start to see a recovery by about April, May. So the last quarter of the year, we had a change in the trend. Rather than a trend of business going south, it's headed north, so really encouraging. Have we hit the bottom? I hope so. Might be a bit early to call that, given that, you know, there's still challenges to come, but certainly we saw a change in our business and turnover from about May. Mojo Group has integrated effectively into our business, to deliver the successful outcome in its first full year.
Great business, and every bit as good as we'd ever hoped, and we're able to help promote that wholesale business and those brands through our retail network. Opening a new shop, we do a lot of marketing for it at a retail level, which helps at a wholesale level as well. But a great product there. We've got a couple of products, but the anchor is CFMOTO, really important brand. During the course of the year, I've been to China and visited the factory and the management there, and it is the most modern motorcycle factory I've ever seen. These people are very serious about taking on the motorcycle market, and burgeoning all over the world. Their sales are increasing U.S. tremendously, Europe, everywhere.
So we really have made the right decision by getting involved with Mojo to begin with, and CFMOTO, particularly. It's the move, it's the new kid on the block, but very serious players. Very good to work with. We've got a tremendous relationship with them, thanks to Michael, who's known them for so long. But they love us, and we love them, and they give us long term agreements, so we know that we can be part of their future, and they just keep coming up with new models. It's an exciting brand. We've had some models that have arrived in the last few months that have sold exceptionally well. So the new agricultural products are just about to be released. We've got huge forward orders for. So exciting times for Mojo Motorcycles.
We also added another electric motorcycle brand called Surron, which is a cross between a motorcycle and a bicycle, and a mountain bike. But it's electric, and you can ride them on the road, and, you know, they'll do 80 kilometers an hour. It's an exciting kind of bike that people like, and we're retailing them as well as wholesaling them. We wholesale them across Australia. So that's just an additional profit center for Mojo. And of course, CFMOTO is bringing out more electric bikes in the future, too. So we're kind of pinned it to the future with CFMOTO. It's the product is price competitive. It's manufactured in Japan, sorry, in China, of course. And they pack them with feature, with tech. You know, they, they're the most tech-savvy products on the market.
Things that you only get in expensive European motorcycles are at the entry level in the CFMOTO. So they appeal to the consumers, particularly the young consumer. They have all the gadgets and bolt-ons that you could hope for, at a better price. You know, I think they're showing a really serious warning to the Japanese market in particular. This brand is here to stay, and they're here to take market share. And fortunately, we'll be part of it. Accessories wholesale, I've touched on that a little bit earlier, but it did have a major disruption during the course of the year. The ERP, the B2B, and the warehouse management system, a whole rearrangement of the warehouse had to happen. So a full stocktake, and then a strategic positioning of all your products.
And that was part of the warehouse management is to modernize, you know, that business, which sorely needed it. So it was a lot of work, and it slowed us down. It cost us sales, it cost us profit, it was frustrating to a lot of our customers, but it's complete, and now we hope to exceed everybody's expectations. And, you know, fortunately, we've been able to win some new brands, too, which help underpin the future. So I believe Cassons has a good future in wholesale, and certainly Mojo does as well. Our finance JV, it's really only a small component of our business, really. It, it's not a massive contributor to profit, but it was down during the course of the year, mainly because of our cost of funds increase.
So to borrow the money from the various institutions cost us, you know, obviously, more as the rates went up, our costs went up, and we weren't able to pass that all on to our consumer at the end. So our margins, our retail rates are still quite high. We did pass on some of it, but I think we had something like a 4% increase across the year in cost of funds, as in four percentage points increase, and we couldn't increase our retail. So that squeezed it. But there's other aspects to look at there, are certainly arrears and, you know, delinquent accounts. But we found that our bad accounts, our accounts improved over the course of the year. So it's, that's tight.
It's higher than perhaps we would like it to be, but it's okay. You know, the bad debts are really not too bad. It's really the cost of funds that's hurting that business, but not a significant amount of our profit in any case, so if I just have a touch on the outlook now. Looking ahead, we anticipate the cost of living pressures to remain. That's gonna continue for a bit longer, obviously, but we've stabilized our cost of doing business. We've got our overheads down, which was not easy. It's difficult and painful to reduce expenses if your turnover is still the same, so we're still doing the same amount of work, if not more, but we're trying to do it with less capital.
Organic growth is expected in our business. There are opportunities within the retail network to increase profit. There's some dealerships there that have underperformed, that should have performed better given the current environment. Some businesses went really well during this period, too, I should add. We've got some real dealerships that increased their profit for the year. So it's a mixed bag, really, and the improvement in our business there comes from within, regardless of the economy and the discretionary spend. The improvements that we can make, the increase organically will come from us, and that will be better management, essentially, in the dealerships. We've got some that are just underperforming. There's been a real challenge to maintain quality staff in the last couple of years.
I think every business in Australia has suffered from that, and we're no different to them. So certainly, you know, it's been a big part of our business of recruiting, trying to get the right person to the right job, and in some cases, it's cost us, but we've got some success stories there. You know, I can think of a few dealerships that were really a problem for us a year ago, and we're scratching our heads as to how to fix them. Well, we were able to. We could change the management and put a different person in there. Same business model, same script, but different person, and we were able to get much better results. So we know that we're on the right track. We know that training our people is what we need to do.
It's difficult to bring them in. You know, we can't just lasso them and bring them in. We have to create these people, and that takes time, and we keep adding retail dealerships to the business, up to 45, I think, or something like that. So we've always got demand for good quality site managers, but we've got to just keep investing in training and encourage the ones that stand out, and that's what we'll be doing. It's just it takes time, but it does work in the long run, without a doubt. So really, I think, you know, retail has certainly got room for improvement, with the market conditions remaining the same. We're starting to make better progress into New Zealand. We're very much at our infancy levels with New Zealand, with the Mojo product.
We've got the accessory business over there called Forbes, which has had steady growth over the last two years since we've owned it, even though New Zealand is doing it quite tough. Mojo didn't have an office or a warehouse or workshop support in New Zealand. It does now. We combined those two businesses into a new warehouse that covers all of the accessory product and all of the new bike product. We've put an area manager over there. So we're giving Mojo every opportunity now to become a more legitimate brand in New Zealand, and I'm sure that will pay dividends. And of course, there are efficiencies running the spare parts, accessories, for Mojo, for Mojo CFMOTO brands out of our warehouse, out of our accessories warehouse. So there's efficiency there.
We've got the additional space that we need now to increase our brand, and we've got a lot more brand presence. So certainly expect growth in the Mojo product in New Zealand, and we're already getting that out of the accessories business called Forbes & Davies. There are other products out there in the motorcycle market that have been offered already, as in wholesale distribution. It's certainly one thing that's become apparent since we've acquired the Mojo business and started talking to different people across the world. Our large retail footprint and our capability in wholesale accessories, and now motorcycles, has made us a unique unicorn, basically, in the motorcycle industry. Not many companies worldwide can do what we do, and nobody, certainly nobody else in Australia does it.
So we've got a competitive advantage against other people wanting to import and wholesale, because we've got a guaranteed retail footprint that nobody else can offer, and it's a large footprint, too, spread across Australia, and it keeps getting bigger every year for the last 35 years. So people overseas are noticing our company more, that when they think about bringing a new product into Australia, we're on their list, on everybody's shopping list, whether it be accessories or new bikes. But both Michael and myself have had conversations with a number of wholesale manufacturers looking for distributors in Australia, and we are getting opportunities. We're being fussy. We're picking the right ones. We don't want ones that will distract us or not deliver.
So, certainly the Surron brand that I mentioned earlier, that is a great product, and they're selling well. So, we expect the CFMOTO business to continue to grow as they bring in more and better models, more motorcycles. So we've still got the off-road ag product going really well. Our market share is still very high. We've got. Now we've got additional products to sell with Mojo. So the growth is almost underpinned in the wholesale business, and that's without adding any other brands. So as that, as time goes on, then we'll sell more and more motorcycles. Our motorcycle sales last year were up tremendously, and we expect another year of strong increase. So it's great. It's a more diversified business model there now. Okay, I think that's pretty much it.
That's our future. I think we've got to run these dealerships slightly better, and we'll get a better return. There's pent-up profit in retail. There's a potential profit there in Cassons by having the, without having the distractions, and Mojo's got you know tremendous product to sell going forward, so we can see how we're gonna grow the business in 2025. I'd certainly expect it to be a better year than 2024. You know given if the market were to stay about the same you know it will definitely be a better bottom line than what we've seen. Be nice to reduce some of that debt. Our intention is to reduce corporate debt.
We're paying a dividend in September, but we're also going to. We've decided to also retire corporate debt, so over six to 12 months, which we've got capital to do. So we're in a good position where the cash is, it's fine, cash position's fine. You know, so we will put cash now into reducing corporate debt going forward. So, yeah, we'll have reduced some of it by the next six months. Okay, thanks very much. I think that's all I've got to say. Any questions from anybody?
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again.
It's been a comprehensive briefing. No, nobody needed? I've answered all the questions already. Okay.
Hi, David. I see no questions. Oh, we have the questions coming up now. One moment.
Okay.
Just a moment for our next question, please. Our first question comes from Lachlan Scott, from Moelis Australia. Please go ahead.
Morning, guys. Just on the accessories wholesale segment, could you quantify the disruption caused from implementing the ERP system in the year, such as if there were any sort of one-off costs? And then also move forward your expectations for growth and margin improvements from here in that segment.
Sure. Yeah. Okay, so our increase in, in software costs for the year for the total business was AUD 1.2 million, but that's the whole business. A lot of it belonged to Cassons. I can't quantify the exact figure, but, you know, I would say more than half of that. So we've had a big investment in, in software, management costs there. With additional products, will help Cassons, which we only acquired towards the end of the financial year, and that other brands, you know, better, better brand of tires or additional brand of tires, oils, various products there, which all will just give us incremental increase over the course of the year. And it took some time to bring that and put that, that stock into, into the warehouse. We had to find locations for it.
So we really didn't get much benefit from that product during the course of the year. So this year, now that it's all in the warehouse and we've been located, we can start promoting those brands. So I expect an increase in turnover from increased brands. And of course, I think I mentioned the helmet brand that we secured when I was in Italy last year. We approached a company there. We wanted to distribute their helmets, and we found a way to convince them to do business with us, and that'll be a substantial product, and millions of dollars when I'm talking an increase in turnover.
So we've got more product, but we've got efficiency more to the point, and how this is going to improve, and then part of this is that margin that you mentioned as well. The last twelve months has very much been an internal focus on the issues that we had in the warehouse, issues that we had with stock control, moving these new systems in and a lot of IT, a lot of disruption. There were lots of periods there where we weren't dispatching, and we got quite behind our orders in that, during the course of the year. At some points, we were two and three weeks behind dispatching orders, because we still had plenty of sales, still had plenty of people wanting to buy our product, but we couldn't dispatch it fast enough.
So, I mean, you just say, hire more warehouse staff. It's just not that simple. We did hire as many as we could, but they still have to be trained. They still have to learn how to do it. We had a whole bunch of efficiency problems in 2024, and probably 2023 as well. But, adding this new product, having the warehouse super busy, they're making too many errors because the operating system was too clumsy and let them make errors. So we had internal problems there, which I believe we've fixed. So the increase, the improvement in the warehouse now has happened, so we can turn our focus now to sales, and we haven't focused on sales, particularly at Cassons in the last year or so.
But we're flat out dealing with the volume that we had, which means, now we can turn our attention away from the logistics of the business, which is important, but, now we can turn it into the sales department, and that's our focus, now for 2025, is what do we have to do to do more business with our existing customers? And, what do we have to do to increase the sales to them? And the answer to that, to me, is there's a lot we can do. You know, I come from a sales background, and I believe that there's lots of room for improvement with Cassons, with sales focus, because, you know, that's what we do essentially.
So we've got 20-odd reps out there every day selling to these dealers, and there's lots that can be done with better management of those reps, better incentivizing those reps, better marketing to the consumer. We've got the product they want. We know the product's good. We've got to come up with the offers and make it attractive to them. So I think that will be a fundamental change for Cassons this year, and that's where we'll focus more on retaining that gross margin. I mean, we obviously try and buy the product as cheap as we can all of the time. So I'm not sure we can do anything differently there, but we can sell more. We can definitely sell more, and the bigger our volume, you know, the more rebate we might get from the manufacturer.
But certainly we need, I think, more margins in the product when we sell it, you know, to the wholesaler. So, and we've got a plan for that. So that's how I think we're going to achieve it.
Excellent. Thank you. And any changes to the competitive landscape for Cassons as well? Obviously, GPC rolling out new retail stores.
Yeah. No, no, that competition is at a retail level, not a wholesale one. So, wholesale-wise, they've existed for, you know, 30, 40 years under different names. So they've always been a wholesale competitor, there's no change to that. Look, where the change is in the retail footprint in Australia, you know, the GPC have come along and opened over 30 outlets now, which, you know, they didn't exist four or five years ago, and these 30 outlets, you can bet that every single one is next door to a MotorCycle Holdings shop. I mean, we're an obvious target. We were doing the majority of the business. We were the leader. So if you're going to get into that business, we would be where you go.
So they've come and opened up right next door to our big shops, you know, our big volume ones in Sydney and Melbourne. They're right next door to us. But that's okay. We're not afraid of the competition. Our sales aren't down by that much. They're only down 7%, I think it was. So given that, you know, they're coming in and right next door, you know, that's pretty serious competition when, you know, your competitor's next door with a big shop with shiny new products. So we've responded, you know, and we've got to be more competitive. We've got to be able to, you know, compete with these guys, and that is part of the margin. We give our own shops an extra discount, so that we can be cheaper with product than everybody else at a retail level.
So, maybe I shouldn't have said that, but anyway, I have. So yeah, it's a retail, but not a wholesale, not a wholesale problem for us.
Okay, got you. Thank you so much. And just shifting to Mojo, obviously, you know, Mojo has a large exposure to the agricultural sector. Any expectations you can share around the demand outlook from those customers going forward? You know, any feedback from the regional-
Yeah, yeah. Good question, because that one caught us out. That one surprised me. This time last year, I was singing the praises of Mojo because it's agricultural product and it's not motorcycle, it's not discretionary spend, you know, so we expect it to fare better in the future. Well, it hasn't. I got it wrong there. It, the agricultural ATV market was down more than any motorcycle segment. In the end, motorcycles were only down a couple of percent and the ag product was down at least 10%-11%. So it actually suffered the biggest decline. So that was a bit confronting. But however, I guess, you know, farmers are people too, and they borrow money, and their interest rates have gone up, and they've got cost of living and farm expenses.
So I guess at the end of the day, this is no different really. They're balancing their income and overheads like everybody else. But and another reason, I think, for that reason, that part of the market to be subdued is, it had an absolute boom. If we look at two, three, four years ago, that part of the market exploded and did exceptionally well, and the growth was considerable. And that's not, you know, it's not different to how it's been in previous years. If I look at that market particularly, it's cyclical, it goes through this kind of ups and downs and boom and bust type of sales results over the long term. But one thing for sure is it always remains, and over the long term it grows.
You know, it's got steady growth if you take a five-year period. But if you look at any one year, you'll see spectacular growth or decline. So I think we went out and bought a lot of these products, you know, two, three years ago, and the farmers did stock up. They were actually stockpiling in some cases, 'cause the four-wheeler, the ATV, was being coming off the market, and no one was bringing them in except us. So farmers got worried, so they started stockpiling that product. So I think they're still working their way through. Fortunately, farmers are really hard on vehicles, and they tend to wear them out in three years and buy a new one.
So I think that as those excess purchasing fades off, we'll see that market come back, so long as there's rain, so long as there's reasonably buoyant, you know, farming conditions. Luckily, CFMOTO came to the rescue with tremendous road bikes. They brought out two models, one of them has just sold exceptionally well, and far beyond my expectation. I knew it would be good. I flagged it in the past. I said, "We've got some new motorcycle models coming," which we've not really had with CFMOTO. It's all been about the four-wheeler market in the past. Motorcycles were only an adjunct. Well, that's changed, and having gone to China and seen what they're doing, I understand.
They're bringing out a full range of motorcycles now, full range of road bikes, and they're high tech, and they're competitive, and they're cheaper, and they've got features, and you just can't ignore what they're doing. And the quality now is really impressive. I would think the quality as a Chinese factory now is equal to Japanese quality, which is what we've seen now, and the Japanese quality is good, and now I can't pick the difference. I've been riding these bikes, you know, the whole year, so, and I'm using them, they're not failing, they're proving to be reliable. We've got a Chinese brand stigma to tackle, to overcome, but the product will overcome it. It is good enough to overcome it, and that's exciting, too.
So, yeah, the motorcycle part is where we're going to see tremendous growth, I think, in CFMOTO in the future. I know there are further models coming, which we don't have yet, which will be next year, and they'll just keep adding to it. So even though the AT market, ATV market has come off, motorcycles is absolutely charging ahead.
That's very interesting. And just finally from me on CFMOTO, so what kind of, you know, levels, stock levels are your CFMOTO dealers holding, and sort of how does that compare to, you know, stock levels across the industry and your competitors?
Well, in the past, they. You know, if we talked recent past, product was hard to get, so they would stockpile. They've got. They were very aggressive in their ordering. If they needed one or two of a particular model, they might have bought five or six because they know they're going to sell them quickly. So the market's slowed down, so they're wanting to reduce their inventory, as you'd expect. So on the floor they have, they've reduced it. They would. They should carry as much of our brand as any other, but that's about the quality of the dealership and how well-capitalized they are. We've made some recent improve appointments to in the dealer land to new dealers that what I would consider to be A-class dealerships.
In other words, you know, they're as good as anybody else, well positioned, marketing well, a good profile. In the past, Mojo has had to kind of take whatever it could when it comes to dealerships, so B-grade dealers, but that's changed. Us becoming a dealer, the success they're having in the marketplace has changed, and now we've got dealerships wanting that product. And so we can. Now we can impose higher standards, better, better dealers that can afford to stock the product. So, you know, they're not overstocked by a mile. They've got the right amount of stock. I don't think there's any stock problems at all in the Mojo world from dealers.
They're not like we have with some of the other brands, you know, at retail level, we've had some stock issues for sure, with stocks being forced down our throat by the manufacturer, but we've dealt with that. If we look at our overall inventory of our business, it's exactly the same as it was six months ago, you know, or it's, let's say, oh, a year ago, we had AUD 155 million inventory. We went down AUD 200,000 for the year in our inventory. So it's stable. We're finding that our stock levels is where we need it to be, both wholesale and retail, accessories and motorcycles. So I think we've got it right.
The fact that it's not increasing is always a good thing, because we've had lots of pressure to buy, that's for sure. So we've managed that, I think, quite well.
Thank you very much.
No worries.
Thank you. Just a moment for our next question, please. Next, we have Jarrod Chisholm from Morgans. Please go ahead.
Hi, Dave. Hey, hi, Nicole. Just a couple of questions from me. Just interested on the planned reduction on the cost base in 2025. I think I saw in the accounts, you mentioned further expense reduction in 2025. So just wanted to know, you know, it's a great cost outcome this year, but wanted to understand what you're gonna target in terms of, that cost base, for the year ahead.
Yeah. There's not much we haven't targeted, to be honest. But there's a couple of areas that we'll reduce our overheads further, and that is, we've got three sites where I'm reducing the rental footprint. So one in Brisbane, one in Melbourne, and one in Canberra, where we literally have too much floor space. We increased those businesses, or they were bigger during the COVID boom, and I think we're probably a little too optimistic there. We thought that we could maintain exceptionally high sales figures. Well, we haven't, and so we can reduce a dealership in Melbourne, lose that rent. Yeah, it's AUD 500,000 a year or thereabouts. Canberra, about the same. You know, we can operate on a smaller space there.
The thing is, with additional floor space, you'll use it if you have it, but you can usually get away with less if you have to, and that's what we're doing, so there's those two, and about six months ago, I flagged that we closed one of our retail spaces in Brisbane, and we've moved that product into other dealerships, so there's three there. Now, I've got to re-rent them, so I'm out of those sites, but I've got to re-lease them, so there'll be a bit of cost associated with that, so I won't say that we're gonna save all of that, but also, by condensing these dealerships or consolidating them, you make the business more efficient.
When you've got big, spread out, floor room space, you have to have more staff to cater for it, because they've got to be somewhere near the customer. So the consolidation actually makes the business more efficient. So we've lose a couple of wages, you know, in a couple of them. But look, really, other than a more efficient business and less rent, I think that's pretty much it. I think we've done everything we can. Ongoing basis, there's always more you can do, but I don't expect anything significant in cost reduction other than those two areas there. So most of it's factored in.
Okay, so just so I'm clear, are you expecting sort of to stabilize the cost base where it's at, or do you expect you can,
No, I still think
Lower them?
No, I think if we stabilize it, it would be good. You know, there's so much pressure on wages, so much pressure for, on overheads going up. You know, there's significant increases in insurance and workers' compensation, things like that. You can't do anything about, you've got that increase. You can't manage your way less other than having fewer staff in some cases. But, you know, we did have a big investment in IT last year, as well, which we won't have this year. And by that, I mean, the increased software cost by 1.2, just software. But, so, you know, we're always upgrading the computer fleet, but we will invest less in IT this year. And we will invest less in rent and some wages.
But, you know, if we can maintain it, I think we've done well. I still expect a slight increase. We won't be reducing it by 5% or 10% or anything like that. I think that's impossible.
No worries. And maybe just I'm trying to understand a little bit of the moving parts in Mojo, particularly that fourth quarter. I understand there was, you know, a new model in there, potentially a big sort of, a few, you know, pre-order bikes that would have come into that quarter. I just wanted to sort of understand, you know, how significant the fourth quarter was to Mojo in the context of the half, and I guess, you know, how do we look at that quarter in terms of seasonality of the year?
It was certainly benefited by the release of 450, this model, which is, like you said, it sold exceptionally well. That's gonna continue the sales for that, for the rest of the year, the calendar year. I think it'll be strong for 12 months. But there are other models coming, but yes, it did help, but you know, the ag market was off. So how significant? Mojo probably had its best month in the last quarter, but then so did retail. Yeah, it was better, maybe above average, but not like millions of dollars or anything like that. But it performed well all year, really, but certainly better in that last quarter. The last quarter was a stronger quarter.
This is a good sign to see that, that wholesale and retail is seeing signs of an increase in business in that last quarter, and that's continued on into July and I think August as well. But certainly we had a very good July. You know, I think it's Mojo's best month ever for, since we've owned it, for unit sales. It never sold so many units as it did in July. June, the month before, was the second-best month, so that's an indicator, and that's driven by motorcycle. But same sort of thing in retail as well, in Cassons. Cassons said it's the best sales month in July. And we've sold our, I think. Yeah, July was our best month for retail sales of new and used bikes for over twelve months.
So there's some really strong indicators there that the last quarter and now the beginning of FY 2025 is positive signs.
Yeah, sure. And maybe just in terms of that performance through July, August, I think it was sort of similar commentary this time last year about, you know, exiting the second half well and then starting the first half strongly. I understand, you know, a lot of the weakness for this year came in the back half of calendar year 2023, but I guess just how do we look at the start of this July, August versus the PCP?
Yeah, well, I think that, yeah, last little July was pretty good as well, so it could be, you know, it's that time of year, I suppose. I don't know. But, I don't think July was as strong as July last year, but it was close. It was certainly one of our best months across the last twelve months. I'm not quite sure of your question there. What, what exactly were you wanting to know?
I'm just trying to understand if you could maybe give a color on, like, a percentage basis on what it was up versus July, August last year?
I don't know off the top of my head. I think, I'd have to just pull that figure again. I just don't have it in front of me. I'm sorry. But I think July last year was good. I think it was a very strong month, and it was a very strong month this year, too. So, I
That, that's fine.
Yeah.
Maybe just one final one on the planned debt reduction as well. You obviously called that out. I'm just trying to understand, you know, the thinking in terms of, you know, reducing that debt out of existing cash flow, or whether you look to other sort of supplemental issues
Yeah.
in terms of the blend of the lot.
If you look at the last financial year, and particularly the last six or eight months, we had the AUD 10 million payout to Mojo just to complete that sale. And, you know, we've had to pay the dividend, interim dividend, and we're paying another dividend now. And we've got plenty of head space there cash-wise, you know, so we think we'll pay some debt down. But that makes sense for us to start reducing that corporate debt. We thought of even paying no dividend, but we thought, you know, we've got the money there. It belongs to the shareholders, they should get something. So happily paid another dividend. But, you know, we want to start paying down.
We haven't got an exact figure, but in six months, you know, AUD 5 million, you know, take another AUD 5 million, twelve months, maybe AUD 10 million. That's we might as well start knocking it off, I think. We've got no other. We've done lots of investing, and it's not stopping us from buying another dealership or, you know, investing in new systems and software. Big investment in software for the year, modernizing systems. So we keep investing in the business as well. But, you know, we'd like to see the corporate level less. You know, it doesn't keep me awake at night, but we've got the cash there. We should pump it into that debt, I think.
That's all for me. Thanks, guys.
Okay, thanks.
Thank you. Just a moment for our next question, please. Next, we have Declan Carroll from Wilsons. Please go ahead.
Morning, David. I was just hoping to get some color on D&A going forward for FY 2025 and FY 2026, if possible, please.
In what regard?
Just where do you see that sort of trending, directionally going forward? Because I noticed, yeah, if we just sort of look, it's been sort of in double digits. Do you expect that to continue?
Sorry, can you explain to me what you mean by D&A?
Depreciation and amortization.
Oh, yes, of course, of course, of course, sorry. It's gonna be the same, I think. It's gonna continue exactly as it has. You know, it is a high cost to the business, you know, without a doubt, but there's no change to that, I don't think. It's very similar last year to the year before, and I think we budgeted this year to be very similar again. Maybe a slight reduction, but, you know, we're not investing in a lot of capital. We've done some. We did two dealership renovations last year, both Harley dealerships, so it did cost us a bit with that. So we're, it's, you know, we, we've kept investing in sites, which is a requirement, really. But there's no big demand for capital equipment.
But the amortization, I think, will stay the same figure. The depreciation will be very similar. You know, it won't change much from year to year.
Yep. No, that's good. I'll take the call, David. That's it.
No worries. Thanks, Declan.
Thank you. I see no further questions at this time. I will now pass back to David.
Okay, thanks very much, Maggie. Thank you very much for your interest in MotorCycle Holdings. If you're a shareholder, I appreciate your patience, and we'll certainly do better in financial year 2025. Okay, thanks, everybody. Goodbye.
This concludes today's conference call. Thank you all for participating. You may now disconnect.