Profits down again at Vertu
08 May 2019
Full year profits for Vertu Motors are down for the second year in a row as the group continues to reflect the difficult trading conditions in auto retail. The group has delivered adjusted profit before tax to the end of February 2019 of £23.7m, down from the previous year’s figure of £28.6m but ahead of market expectations.
The group said new car retail volumes were “stable and ahead of the market trends” while there was like-for-like revenue growth in both aftersales and used cars. However gross margins were down in new, used and aftersales and operating costs were up.
Chief executive, Robert Forrester said: “Margins reduced due to continued increases in vehicle selling prices, whilst profit per unit increased at a slower rate. Selling price rises were due to currency pressures in new vehicle channels but also the increasing premium mix of the group which also tends to reduce gross margin percentages.”
Total group revenue was up by 6.7% to a fraction under £3bn in a year when Vertu went back on the acquisition trail and bought Hughes Group for £24.0m in July 2018. It also acquired LCV specialist Vans Direct. Like-for-like revenue was up 5.1%, driven primarily by growth in used and aftersales.
Profit before tax was £25.3m including a receipt of £3.1m of VAT income following HMRC’s clarification of the treatment of dealer deposit allowances, which also benefits the wider automotive retail sector.
Chairman Peter Jones told investors the auto retail sector had faced “a number of challenges” in the year but, despite this the group delivered “a credible result in profit terms and very strong cash generation”. Shareholders will be rewarded with a dividend increase of 6.7%, with a total dividend for the year of 1.6p per share.
Jones also announced that he will be standing down as chairman, a role he has held since January 2015. A process has commenced to find a new non-executive chairman for the group and further announcements are expected in the coming months.