Vertu issues profit warning
25 January 2018
Vertu Motors has issued a profit warning ahead of its year-end on 28 February 2018. In a stock market statement Robert Forrester, Vertu chief executive, said the business expected trading to be moderately below current market expectations, following further declines in the new car market resulting from the depreciation of Sterling and a softer general consumer environment.
He added: “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,” the stock market statement said.
Vertu’s total new car retail sales volume fell 15.7%, with like-for-like down 13.2%, in the last four months of 2017, against a market fall of 9.5%, while used car volumes fell 5%.
Those volume manufacturer that saw a double digit declines last year include Vauxhall, Peugeot, Citroen and Renault. Vertu is particularly exposed to Vauxhall as it holds 14 franchises, but the retailer also holds Peugeot, Citroen and Renault franchises.
However, Vertu added: “The Group’s like-for-like new retail vehicle volumes declined by 13.2% during the Period, reflecting the Group’s franchise mix, while the SMMT data showed an overall fall of 9.5%. The Group achieved its manufacturer volume targets in the period, like-for-like gross margins were stable and like-for-like gross profit per unit increased by 2.9%, from £1,408 to £1,450.”
Vertu remained upbeat about its aftersales performance with like-for-like service revenues up 3.7% for the same period.