TIDMVTU
RNS Number : 7250K
Vertu Motors PLC
30 August 2023
30 August 2023
Vertu Motors plc ("Vertu Motors", "Group", "Company")
Trading remains positive - in line with expectations for the
full year
Ahead of the announcement of its results for the six-month
period ended 31 August 2023, Vertu Motors, a leading UK automotive
retailer with a network of 189 sales and aftersales outlets is
pleased to provide an update on current trading. The Group has
delivered a trading profit above prior year levels, aided by the
Helston acquisition which was completed in December 2022. The Board
anticipates that full year results for FY24 will be in line with
current market expectations.
In the New retail and Motability channel, like-for-like volume
growth has been delivered, as supply constraints continue to ease.
Supply is improving overall which aids sales volumes. Recent
increased supply of new electric vehicles appears to be exceeding
retail demand, creating an imbalance in pipeline inventory coming
into the key plate change month of September. Manufacturers are
reacting to this through the offer of discounted prices and
supported finance rates to stimulate retail demand. Fleet sector
demand for electric vehicles remains robust and is currently
critical to the electrification of the vehicle parc.
Fleet and commercial vehicle like-for-like volume growth was
delivered by the Group, aided by strong demand and improved supply.
Fleet and commercial vehicle gross margins remain strong.
Used vehicle like-for-like volumes declined 6.3% in the five
months ended 31 July 2023. Rising interest rates have meant that
the Group has this year been unable to run its popular 0% finance
offers on used vehicles during event periods as it did in the prior
year. This change in approach, along with a continued lack of
supply of used vehicles has driven the reduction in the number of
like-for-like used vehicles sold. Autotrader has recently noted
these supply issues, highlighting that there are 27% fewer
sub-5-year-old-cars in the UK parc compared to 2019. These supply
trends have helped drive stability in used vehicle prices, except
for used electric vehicles which have been impacted by substantial
increases in supply into the used market. Overall, used gross
profits per unit have continued to be above historic levels as
anticipated and are comparable to the prior year. Supply trends
have driven an increase in the mix of older vehicles being retailed
by the Group. Despite the overall supply dynamics, the Group during
the period has successfully increased vehicle inventory levels to
ensure future sales volumes are maximised. This has been possible
due to the strong procurement capabilities of the Group in the used
car area, including the close partnership with its manufacturer
partners and the benefits that come from part exchanges derived
from increasing new car sales.
The Group has seen strong demand for its high margin vehicle
repair and service operations, driving revenue growth in both
service and parts. Technician resource levels remain a constraining
factor in meeting both retail demand for work and in the
preparation of used vehicles for sale (older vehicles require more
preparation). Consequently, the Group has taken further pay action
in July to promote the recruitment and retention of Technicians and
this should aid further growth. Improved gross profit was delivered
in all aftersales channels on a like-for-like basis. As expected,
gross margin percentages in service declined due to higher
technician salary costs.
Good progress has been made in the Group's accident and cosmetic
repair operations, which have delivered revenue and profit growth
compared to the prior year.
Group operating expenses as a percentage of revenues are
slightly lower than last year despite higher energy costs,
inflation, pay actions and investment in the Group's Information
Technology platforms. A strong focus on driving efficiency and
productivity is in place, with growing use of technological
solutions to deliver efficiency and therefore cost reductions. The
Group continues with its energy purchase strategy with 26 sites now
having solar panels installed. 12% of the Group's July electricity
requirement was self-generated, with installations at 14 further
sites currently ongoing.
Interest expenses are higher than anticipated in the period due
to increased manufacturer stocking changes as new car pipeline
stock increased and interest rates rose.
The Group has continued to buy back shares, repurchasing
approximately 7.4m shares, representing 2% of opening shares in
issue, in the financial year to date, for a total cost of
GBP4.8m.
Outlook
The Board remains optimistic for the future. New vehicle supply
is increasing whilst constraints in used vehicle supply in the UK
persist, particularly in the sub-5-year-old parc, helping to
underpin used vehicle values. The roll out of agency distribution
models is at an early stage and the Group will continue to monitor
the impact on the business and financial returns. Whilst used
vehicle purchases remain essential for many, the market outlook
remains unclear due to the impact of inflationary pressures and
higher interest rates for consumers. Aftersales demand remains
strong with actions taken to increase available resource.
The Helston acquisition made in FY23 continues to perform in
line with expectations and remains on target to deliver on the
planned improvements.
Management remains focused on operational excellence around
cost, conversion and customer experience and the delivery of the
Group's strategic objectives through enhanced performance coming
from scale and technology. The Board anticipates that full year
results for FY24 will be in line with current market
expectations.
Robert Forrester, Chief Executive Officer of Vertu Motors,
said:
"I am pleased to report that trading remains positive. The
entire Vertu team has put in hard work and dedication once again,
and I would like to thank them all. Used car pricing has remained
firm and we have gained market share in the new car market. The
performance of our high margin aftersales business has remained
strong.
The integration of Helston Garages remains on track to deliver
the planned synergies. The Board remains optimistic for the future,
we anticipate that full year results will be in line with current
market expectations, and we are excited about the opportunities our
enlarged portfolio will create for Vertu Motors."
For further information please contact:
Vertu Motors plc Tel: +44 (0) 191 491 2121
Robert Forrester, CEO
Karen Anderson, CFO
Phil Clark, Investor relations PClark@vertumotors.com
Zeus (Nominated Adviser and Broker) Tel: +44 (0) 203 829 5000
Jamie Peel
Andrew Jones
Dominic King
Camarco Tel: +44 (0) 203 757 4983
Billy Clegg
Tom Huddart
Notes to Editors
Vertu Motors is the fourth largest automotive retailer in the
UK with a network of 189 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 185 franchised sales outlets and
4 non-franchised sales operations from 139 locations across
the UK.
Vertu's Mission Statement is to "deliver an outstanding customer
motoring experience through honesty and trust".
Vertu Motors Group websites - https://investors.vertumotors.com
/ www.vertucareers.com
Vertu brand websites - www.vertumotors.com / www.bristolstreet.co.uk
/ www.macklinmotors.co.uk / www.vertumotorcyles.com
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