Vertu Motors PLC Pre-Close Trading Update (3459Y)
September 06 2022 - 1:00AM
UK Regulatory
TIDMVTU
RNS Number : 3459Y
Vertu Motors PLC
06 September 2022
6 September 2022
Vertu Motors plc ("Vertu Motors", "Group", "Company")
Trading Update
Strong trading performance in the first half - in line with
market expectations for the full year
Ahead of the announcement of its results for the six-month
period ended 31 August 2022, Vertu Motors, the automotive retailer
with a network of 160 sales and aftersales outlets across the UK,
is pleased to announce an update on current trading.
The Group has performed strongly in the first half of the
financial year, however, there remains uncertainty around vehicle
supply and the macro-environment for consumers which is likely to
be affected by rising energy costs and inflation generally.
Consequently, profitability is expected to be more weighted to the
first half of the financial year. The Board currently anticipates
that trading performance for the full financial year will be in
line with current market expectations.
Constrained supply of new vehicles in the UK has continued due
to dislocation in global supply chains, particularly around
semi-conductors with its resultant impact on vehicle production
levels. Both UK market and Group vehicle volumes in the new retail
and fleet channels have consequently seen year-on-year declines.
The Group's order bank levels for new vehicles remain high, with
almost 13,000 new retail orders currently awaiting delivery and
strong fleet and commercial order banks also in place. Gross profit
generation from the sale of new vehicles is ahead of last year,
despite the decline in volumes, due to stronger margins.
There have also been supply constraints in used cars, which,
combined with the comparative period in the prior year reflecting
post lockdown pent-up demand, have resulted in a decline in
like-for-like used car volumes. Used vehicle wholesale prices have
stabilised after a period of significant growth, and so whilst
gross profits per unit have remained above normal levels, they are
reduced from the very high levels witnessed in the financial year
ended 28 February 2022.
The Group's high-margin aftersales departments have delivered
revenues ahead of prior year levels on a like-for-like basis. In
the service departments, retail revenue grew as the Group increased
customer retention and continued to more effectively penetrate the
older car servicing market. Internal preparation of used cars saw
increased revenues in the service departments, due to higher charge
out rates and the impact of more preparation being required as
older cars were retailed. Warranty activity remains subdued, as a
result of the decline in the 0-3 year vehicle parc. Service margins
reduced, as expected, due to higher technician costs. Parts, smart
repair and accident repair centres saw continued significant
performance improvements in revenue and gross profit terms as the
Group continued to execute on its growth strategy in these
areas.
Operating expenses have increased year-on-year as a consequence
of rising costs and the removal of Government support for business
rates, which reduced costs in H1 2021 by GBP5.2m. Costs are in line
with planned levels as a percentage of revenue. It should be noted
that the business currently benefits from below market rate
electricity costs under a fixed contract expiring at the end of
September 2022. There will consequently be an increase in the
Group's cost of energy in the second half of the financial year.
Management is very focused on reduced energy usage where
appropriate and an energy purchasing strategy has been developed
which includes the sourcing of off-grid energy solutions in order
to manage the Group's exposure to energy market price volatility
risks.
Management remains focused on the delivery of operational
excellence around cost, conversion and customer experience. In
addition, the Group continues to evaluate and execute acquisition
opportunities as it seeks to deliver its core strategic objective
of value accretive growth. The Group has more franchise
relationships than any other UK Group and yet discussions are
moving positively with a number of franchises the Group does not
currently represent which are likely to lead to further growth in
scale.
For further information please contact:
Vertu Motors plc
Robert Forrester, CEO Tel: 0191 491 2111
Karen Anderson, CFO Tel: 0191 491 2112
Zeus Capital Limited Tel: 020 3829 5000
Jamie Peel
Andrew Jones
Dominic King
Camarco Tel: 020 3757 4983
Billy Clegg
Tom Huddart
Notes to Editors
Vertu Motors is the fifth largest automotive retailer in the UK
with a network of 160 sales outlets across the UK. Its dealerships
operate predominantly under the Bristol Street Motors, Vertu and
Macklin Motors brand names.
Vertu Motors was established in November 2006 with the strategy
to consolidate the UK motor retail sector. It is intended that the
Group will continue to acquire motor retail operations to grow a
scaled dealership group. The Group's acquisition strategy is
supplemented by a focused organic growth strategy to drive
operational efficiencies through its national dealership network.
The Group currently operates 156 franchised sales outlets and 4
non-franchised sales operations from 121 locations across the
UK.
Vertu's Mission Statement is to "deliver an outstanding customer
motoring experience through honesty and trust".
Vertu Motors Group websites - investors.vertumotors.com /
www.vertucareers.com
Vertu brand websites - www.vertumotors.com /
www.bristolstreet.co.uk / www.macklinmotors.co.uk /
www.vertumotorcycles.com
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