EUROPEAN Motor Holdings has increased profits despite difficult trading conditions.

The company, which operates 18 dealerships across the North-East, including Mill Garages, saw pre-tax profits for the year ended February 28, rise by 10.2 per cent to £8.5m.

The Government's inquiry into new car pricing had a significant impact on the company's first half performance, with many customers putting off their new car purchases until manufacturers reduced their prices.

But in the last two months of the year, there was evidence that customers were returning to the showrooms.

New car sales for March 2001 were considerably higher than for the same month of last year.

The group is looking at a number of opportunities. It has recently bought its fourth Jaguar business, in Doncaster, and has been awarded the Volvo territories for Leeds and Harrogate from January 1, next year.

In October, the company, as the UK importer for Malaysian car manufacturer Perodua, launched the new model, the Kenari, at the British International Motor Show in Birmingham.

The launch was so successful that EMH has sold every Kenari that it has imported.

As a result, it will be importing Perodua's five-door hatchback, the Kelisa, from January.

EMH chief executive Richard Palmer, said: "The 10.2 per cent increase in pre-tax profit in the last year represents an outstanding achievement in a very challenging environment.

"We have considerably outperformed our competitors in the sector and, in view of the improved trading environment, believe we can look forward to another year of sustained improvement in efficiency and profitability."

Shareholders will receive a dividend of 6.5p per share for the year, a rise of six per cent.