Shares in Halfords rose 16 per cent on Thursday as the group returned to profit thanks to growth in its motor repair business. 

The business reported a full-year underlying profit before tax of £45.4million, beating expectations of £40.3million. In the previous year, the firm posted a £30million loss.

Total revenue grew five per cent to £1.8billion as the business pushed to bolster its garage and motoring arm. 

Revenue across Halfords' autocentre operations increased by six per cent to £740million on a like-for-like basis.   

Halfords said its repair services continued to gain traction in the period, as the firm believes Britain's ageing car stock presents opportunity for growth. 

The strength of the company's motoring repairs arm outweighed 'ongoing weakness' in the tyres market, it said. 

Group sales jumped 4.8 per cent with retail up 4.1 per cent and autocentres up 5.8 per cent.

The company said its consumer garages business, which includes car repairs and MOTs, had been boosted by the opening of dozens of fusion garages, which integrate retail and garages together. 

It has opened more than 100 of these garages and is aiming for another 35 this year. 

Halfords said it planned to modernise its garage network by bringing in specialist electric vehicle servicing equipment into most sites and give staff tablets to support vehicle inspections. 

Halfords expects 2027 earnings to come in at between £45.7million to £52.3million, which is higher than most analysts expected. 

The company's board of directors have recommended a final dividend of 6p, increasing the total FY26 dividend by 0.2p to 9p 'based on improved profitability and within the Group's cover-based policy'.

The business said it had not seen any change in ​customer behaviour stemming from the war across the Middle East, though it cautioned ‌that ⁠any impact on consumer sentiment and spending power would likely emerge from the second half of its current fiscal year. 

In a bid to manage higher taxes and costs as an employer, Halfords said it had been redeploying staff hours 'from low to high utilisation' garages while also reducing reliance on more expensive agency labour. 

Henry Birch, chief executive at Halfords, said: 'With good sales growth, higher margins and an increased dividend, we are delivering improved shareholder returns alongside a more compelling customer proposition.

'These are early days in our growth strategy and there is much still to do as we seek to leverage Halfords' clear strengths: leading market positions, an unmatched physical and digital presence in motoring and cycling, a trusted brand, and a unique services proposition made possible by more than 12,000 expert colleagues.'

Halfords shares rose 16.11 per cent or 29.00p to 209.00p on Thursday morning.

Victoria Scholar, head of investment at Interactive Investor, said: 'Amid a challenging consumer backdrop, consumer demand remains robust for its motoring and cycling services and products. 

'Halfords has delivered a strong set of results, with investors cheering the update, evidenced by today's double digit percentage jump in its share price. 

'A combination of better-than-expected earnings, impressive profit guidance, a dividend increase and positive commentary on its turnaround strategy are all encouraging signs.'