Vertu reports encouraging outlook despite profit drop
09 May 2018
Vertu has seen adjusted profit before tax fall to £28.6 million in its latest annual results for the year ended 28 February 2018. The figures were down on the previous year’s £31.5m profit figure. However, the group reported an “encouraging outlook” with March and April in line with expectations.
Turnover for the Vertu, one of the UK’s largest franchised retailer groups, was down 0.9% to £2.8bn last year.
However, Vertu increased its dividend to 1.5p a share from 1.4p last year.
Commenting on the results Robert Forrester, chief executive of Vertu, said: “We have closed what turned out to be a more challenging year for the sector, with the business in a strong position. We have been deliberately cautious on the acquisition front as pricing moved away from our investment valuation metrics. This trend is beginning to reverse and potential acquisition opportunities are increasing. Our strong balance sheet with net cash of £19.3m, together with our unutilised debt facilities, provides scope for further scaling-up of the business to drive value and further enhance shareholder returns.
“We remain very focused on capital allocation and continue to make progress on realising surplus property assets and managing the dealership portfolio. The Board sees value in a continued share buyback programme cognisant that tangible net assets per share are at 45.4p. The full year dividend has been increased by 7.1%.
“We are pleased with the performance of the Group in March and April in all key areas. The Board therefore has confidence for the full year.”
The figures follow a profit warning issued at the end of January in which Mr Forrester said: “The group has experienced tougher trading conditions compared to recent years as Sterling’s devaluation places pressure on new car pricing and supply. This has coincided with a slightly softer general consumer environment in the run up to Christmas which has been well-reported.”
The statement singled out a decline in new car registrations from volume manufacturers.
“Price rises and transfer of supply to other markets have been witnessed particularly impacting volume manufacturers who have lost market share to premium marques. A number of major motor manufacturers have seen significant double-digit declines in their UK registrations.”