REG - Vertu Motors PLC - Pre-Close Trading Update

Vertu MotorsAnnouncement

06/09/2022 07:00

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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 £5.2m.  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
(http://investors.vertumotors.com) / www.vertucareers.com
(http://www.vertucareers.com)

Vertu brand websites - www.vertumotors.com (http://www.vertumotors.com) /
www.bristolstreet.co.uk (http://www.bristolstreet.co.uk) /
www.macklinmotors.co.uk (http://www.macklinmotors.co.uk) /
www.vertumotorcycles.com (http://www.vertumotorcycles.com)

 

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