REG - Vertu Motors PLC - Trading Update

Vertu MotorsAnnouncement

Today 07:00

For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20260305:nRSE3821Va&default-theme=true

RNS Number : 3821V  Vertu Motors PLC  05 March 2026

5 March 2026

Vertu Motors plc ("Vertu Motors" or the "Group")

Trading Update: New vehicle market challenged; aftersales robust, strong cost
control and new £12m share buy-back programme

Vertu Motors, a leading UK automotive retailer with a network of 188 sales
outlets, is pleased to announce the following update with regards to the
five-month period to 31 January 2026 (the "Period") ahead of its preliminary
results for the year ended 28 February 2026 to be announced on 13 May 2026.

HIGHLIGHTS

·   New car market remains challenging due to the Zero Emission Vehicle
("ZEV") mandate impacting Manufacturers and retailers alike.

·    The Group's new vehicle like-for-like order-take for the important
plate change month of March is tracking well, in line with prior year levels.

·    Used car performance solid, with like-for-like volume growth of 2.8%
delivered in the Period, at slightly reduced margins.

·    Group's high margin aftersales operations delivered a very robust
performance, with revenue and gross profit growth achieved.

·   Further cost efficiency programme with £10m annualised cost savings
delivered ahead of FY27.  Exceptional costs of c£4-4.5m incurred in FY26
results to achieve these savings and resulting from a limited number of
dealership closures.

·    The Group continues to actively manage its portfolio with further
expansion of Chinese brands delivered and planned.

·    The Group's Jaguar Land Rover ("JLR") business has returned to normal
operations after the reported cyber-attack on JLR in September 2025.  The
financial impact of the cyber-attack has been below what was originally
anticipated, with an insurance claim progressing.

·    Full year FY26 adjusted(1) profit before tax expected to be in line
with market expectations(2).

·   New £12m share buyback programme launched.  This follows the
purchase of 18.8m shares for £11.3m under the existing £12m share buyback
programme, which was launched in February 2025.

·    The Group continues to dispose of surplus properties held for resale
with proceeds of approx. £1.8m in the second half of the financial year and a
further £3.5m receivable by mid-March. These disposals undertaken at above
net book value.

·    Year-end net debt(3) expected to be approximately £65m (FY25:
£66.6m), reflecting strong working capital management and robust free cash
flow generation.

(1) Adjusted for exceptional items

(2) According to compiled data at 27 February 2026, the current consensus of
three sell side analysts' expectations for FY26.  Adjusted profit before tax
is £21.6m with a range of £21.0m to £22.0m.

(3) Excluding lease obligations

 

Robert Forrester, Chief Executive of Vertu Motors said:

''We are pleased with the team's performance as we control the controllables
against a challenging market backdrop in the new vehicle segment in large part
due to the Government's ZEV mandate.  Used vehicle sales were robust despite
consumer uncertainty impacting retail demand.  Our resilient aftersales
business continues to thrive aided by higher technician numbers. The work that
has gone into cost control, property disposals and optimising stock levels has
contributed to an excellent cash performance.

"Despite the impact of the complex market dynamics on the short-term
performance of the business, the sector presents opportunities for Vertu given
our strong balance sheet, excellent Manufacturer partnerships and reputation,
robust and scalable systems, and a great team."

                          5-month period ended 31 January 2026 Var to 2025
                          Total Group        Like-for-like      SMMT UK registrations

 Group Revenues           3.3%               2.2%
 Service Revenues(4)      4.8%               3.7%

 Volumes:
 Used Retail Vehicles     3.6%               2.8%
 New Retail Vehicles(5)   2.4%               0.8%               5.6%
 Motability Vehicles      (10.8%)            (12.7%)            (15.3%)
 New Fleet Cars(5)        24.0%              25.8%              12.7%
 New Commercial Vehicles  (7.5%)             (9.9%)             (8.5%)

(4) includes internal and external revenues

(5)  includes agency volumes

TRADING UPDATE

For the 5-month period ended 31 January 2026.  All commentary below reflects
the Period compared to the 5-month period ended 31 January 2025 unless stated.

UK New Car sales

For the first time since the pandemic, the 12 months to 31 December 2025 saw
UK new car registrations reach over 2 million units (Source: SMMT).  The
market remains substantially below pre-pandemic levels with the mix between
retail and fleet far more fleet-orientated in recent years. The uplift in
registrations has been achieved at the expense of significant Manufacturer
subsidy of Battery Electric Vehicle ("BEV") sales, reported by the SMMT to
have cost more than £5 billion in 2025 and averaging at least £11,000 per
car.  Discounting of this magnitude is clearly financially unsustainable for
the Manufacturers.  The need for discounting is being driven by the UK
Government's ZEV mandate as part of its decarbonisation drive.  The UK has
the most ambitious transition trajectory of the major markets, backed up by
fines of £12,000 per car for breaching the targets.  The UK Government have
also adopted policies which are sending mixed signals to consumers on the
benefit of electric vehicles, for example, combining grant subsidies and the
proposed implementation of the new electric vehicle pay as you drive charges
from 2028.  BEV cars represented 23.4% of all car registrations in the UK in
2025, a figure well below the 28% required by the ZEV mandate.  The ZEV
mandate target in 2026 is 33% rising to 80% by 2030.

New retail car and Motability sales

SMMT data showed a 5.6% increase in UK private registrations in the Period
with this growth concentrated in Chinese new entrants into the UK market,
which have grown share quickly.  New Chinese Manufacturers represented
approximately 5.5%(6) of the 2025 new car market (2024: 0.7%).  The Group's
like-for-like volumes of new retail vehicles grew by 0.8%, which exclude much
of the Group's recent expansion into Chinese brands.  Total new retail
registrations for the Group rose 2.4%.  During the Period, the Group has
augmented its portfolio, opening three BYD and one Geely sales outlets, with a
further three Geely outlets scheduled to open in the next six months.
Advanced discussions are ongoing to deliver further expansion with Chinese
brands as the Group actively manages its brand portfolio.

(6) Source: SMMT, includes BYD, Jaecoo, Omoda, Chery, Leapmotor, Xpeng, GWM,
Geely and Changan.

Fleet & Commercial vehicle sales

The growth in UK vehicle registrations in 2025 was predominantly driven by
fleet car volume, with this channel including the growth in corporate sales
channels such as salary sacrifice schemes for company car users to acquire BEV
vehicles and broker leasing channels.  The SMMT reported an 12.7% increase in
fleet car volume in the Period.  The Group's like-for-like fleet car volumes
grew by 25.8% in the Period.

In contrast, the commercial vehicle market in the UK has shown signs of
continued weakness.  Driven by weaker business confidence throughout the
Period, UK van registrations were down 8.5%.  The Group's like-for-like
volume of commercial vehicle sales declined by 9.9% in the Period, slightly
behind the national market.  There is also a ZEV Mandate for van sales in the
UK which is having a negative impact on the market.  A structural challenge
in increasing BEV adoption in commercial vehicles is the increasing caution
being demonstrated by major vehicle funders.  Concern over residual values is
impacting the appetite of funders to place BEV vans on their balance sheets.
 The target BEV mix in 2026 is 24% against an actual UK van registration BEV
mix of 9.4% in 2025.  This clearly has the potential for market disruption.

Used vehicle sales

The SMMT highlighted that UK used vehicle transactions grew 2.2% in 2025.
Within this growth, the older, lower value cars in the used vehicle market
performed best.  This is reflective of subdued consumer confidence and
continued cost of living pressure.

Group like-for-like used vehicle volumes grew 2.8% in the Period which the
Board believes represents out performance versus franchise retailers in
general.  This growth in volume was delivered at slightly reduced margins.
albeit margins absorbed higher labour charges from the service channel in the
preparation of used cars.

Aftersales

Aftersales remains a vital contributor to overall Group profitability.  The
Group was successful in delivering growth in turnover and gross profit in each
of its key aftersales streams in the Period.  This performance was aided by
strong technician resource levels, higher internal labour recovery rates and
good execution of the Group's customer retention and conversion strategies.

Operating expenses

Costs remain well controlled, with like-for-like Core Group expenses
marginally ahead of prior year over the Period despite well publicised cost
pressures for UK retailers.

To offset the ongoing profitability headwinds in the new vehicle market due to
the ZEV mandate, the Group has again sought to reduce headcount and undertake
other cost actions on a proactive basis.  This has been achieved in advance
of the new financial year through various measures, including the deployment
of efficiency initiatives aided by technology, a further targeted headcount
reduction programme and the closure of four sales outlets in the Period.
 Associated reorganisation and closure costs of approximately £4-4.5m will
be included in non-underlying costs in the year to 28 February 2026 due to the
scale and one-off nature of the actions taken. The exceptional item includes
offsetting gains on disposal of properties and businesses.

JLR Cyber-Attack

The Group's Jaguar Land Rover ("JLR") business has returned to normal
operations after the reported cyber-attack on JLR in September 2025.  The
anticipated financial impact on the Group is expected to be less than the
£5.5m previously estimated. In addition, the Group's insurance claim in
relation to the losses is in progress and a £1.0m interim payment has been
agreed and will be received in the coming days.  The interim payment will be
included in the financial results for the year ended 28 February 2026,
partially offsetting the costs incurred in the Group's JLR operations as a
result of the cyber-attack.

PORTFOLIO MANAGEMENT

The Group continued to actively manage its dealership portfolio in the Period
repositioning the Group for future success.

·    On 1 November 2025 the Group acquired the trade and assets of
Leicester Skoda for £0.6m including a £50k payment in respect of goodwill.
The outlet continues to operate from the leasehold premises acquired.

·   In November 2025 the Group opened Nottingham Skoda, in leasehold
premises already held by the Group.  This brought the total number of Skoda
outlets operated by the Group to five.

·    On 20 February 2026 the Group completed the sale of the Group's Honda
dealership in Huddersfield, generating cash proceeds of approximately
£1.0m.  This included a payment in respect of goodwill of £0.4m and
generated a profit on disposal compared to book value of c.£0.3m.

·    In late 2025, the BYD franchise opened in Hartlepool and Macclesfield
in former Ford outlets.  Representation of the BYD brand by the Group was
further augmented by the addition of the Morpeth outlet alongside Ford and
Honda.

·    In February 2026 the Group opened its first Geely sales outlet in
Glasgow, in an existing freehold dealership, which was formerly a Ford
dealership, with a further three outlets planned to open in the coming months
in Birmingham and Teesside for this new Chinese brand.

·    The Group intends to add the Chinese brand, Leapmotor, into a number
of Stellantis existing operations in the coming months.

The start-up nature and timings of the above sales outlet openings and
acquisitions had a dilutive impact on the Group's earnings in FY26 of
approximately £0.8m.

The Group continued its pruning activities, to optimise capital allocation,
closing its Volvo and Peugeot businesses in Barnstaple and a Peugeot
dealership in Launceston in February 2026.  The freehold property at
Barnstaple is now being marketed as a surplus property disposal. The Group
also ceased Honda operations from Bradford in January 2026 with the dealership
becoming solus Kia and with an agreement to bring the Kia commercial vehicle
(PBV) franchise to the Group for the first time in the coming weeks.

During the Period, the Group exchanged contracts to dispose on surplus land in
Glasgow for £3.5m.  The transaction is expected to complete on 16 March 2026
delivering a reduction in gearing.  This disposal is being undertaken with a
small profit on net book value.  The Group completed on the disposal of a
further surplus property on 27 February 2026 for £1.8m, which is above net
book value.

The Board continues to actively manage the Group's portfolio of dealerships
and assess further growth opportunities, utilising strict investment return
metrics to ensure discipline in capital allocation.

Net Debt

Year-end net debt (excluding lease obligations) is expected to be
approximately £65.0m, (FY25: £66.6m), in line with market expectations.
 This performance reflects strong working capital management and absorbs the
substantial share buyback programme undertaken. At the year-end date, the
Group had no utilisation of used vehicle stocking loans and gearing is at a
low level reflecting the Group's strong balance sheet.

Capital Allocation

Throughout the financial year the Group has continued to buy back shares.
Under the £12.0m authority announced on 6 February 2025, 18.8m shares
(representing 5.7% per cent of opening shares) have been repurchased at a cost
of £11.3m.  The average share price paid was 60p which is substantially
below tangible net asset per share levels.  The Board believes that this is
an attractive use of capital as a relevant element of returns to shareholders,
alongside dividend payments, and today announces a further £12m continuation
of its programme of buybacks.  The Group has now purchased over 21% of its
share capital through buyback programmes operating since FY18.

OUTLOOK

Full year FY26 adjusted(7) profit before tax expected to be in line with
market expectations(8).

Manufacturers of new vehicles (cars and vans) selling in the UK continue to
face a daunting task to manage volumes and mix of Internal Combustion Engine
(ICE) and Battery Electric vehicles (BEV) in the light of the VETS legislation
driving the ZEV mandate and ongoing lack of retail consumer demand for BEVs
compared to accelerating targets.  Manufacturers are responding with elevated
discounting and incentives to sell BEVs, putting ongoing downward pressure on
the industry profit pool.  This disruptive impact is anticipated to be
amplified further in the year ahead along with potential rationing of non-BEV
product.  These effects are likely to continue to impact volumes,
profitability and channel mix.

The Group is not standing still against this headwind.  The Group's
aftersales business continues to see revenue and profit growth.  A new
strategic initiative will be launched in April with the Group's used vehicle
business, generating more focus on older vehicle retailing in the
7-14-year-old range, opening a new segment, leveraging the Vertu brand,
distribution and data expertise in used vehicle pricing.  This is the
strongest part of the current used car market and has the potential to enhance
volumes and margins for the Group.

In addition, after successfully implementing a cost savings programme
following the Autumn 2024 Budget to offset the material wage cost headwinds,
the Group has undertaken a new £10m cost efficiency programme in recent
months ahead of the new financial year.  This includes continued efficiency
savings including use of AI technology, reduced planned marketing activity
following the April 2025 rebrand and further headcount reductions.  The
combined effect of these collective market dynamics and management actions is
that adjusted profit before tax is expected to increase moderately in the year
ahead.

The Group's current focus is on continuing to successfully manage this period
of adjustment in the sector, where consumer and business confidence remains
muted and Government impacts are material. The Group is one the largest
players in the sector gaining scale benefits and is well-placed for future
success.  Recent pressures on new vehicle market profitability have impacted
the sector, but they do not change the longer-term fundamentals of our
business.  We are delivering on our stated strategy and are well-positioned
and ready to take advantage of opportunities that arise when the market is in
an adjustment period, given the Group's track record of execution and strong
financial position.

The Group will announce its preliminary results for the year ended 28 February
2026 on 13 May 2026.

(7) Adjusted for exceptional items.

(8) According to compiled data at 27 February 2026, the current consensus of
three sell side analysts' expectations for FY26.  Adjusted profit before tax
is £21.6m with a range of £21.0m to £22.0m.

 

This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) 596/2014 as it forms part of UK domestic law
by virtue of the European Union (Withdrawal) Act 2018 ("MAR"), and is
disclosed in accordance with the Company's obligations under Article 17 of
MAR.

 Vertu Motors plc

                                                                              Tel: +44 (0) 191 491 2121
 Robert Forrester, CEO
 Karen Anderson, CFO

 Phil Clark, Investor Relations

 Stifel (Nominated Adviser and Joint Broker)               Tel: +44 (0) 207 710 7688
 Matthew Blawat
 Callum Stewart

 Shore Capital (Joint Broker)                                                 Tel: +44 (0) 20 7408 4090
 Mark Percy / Sophie Collins (Corporate Advisory)
 Isobel Jones (Corporate Broking)

 Camarco                                                                      Tel: +44 (0) 203 757 4980
 Billy Clegg
 Tom Huddart

 

Notes to Editors

Vertu Motors is the fourth largest automotive retailer in the UK with a
network of 188 sales outlets across the UK.

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.

Vertu's Mission Statement is to "deliver an outstanding customer motoring
experience through honesty and trust".

Vertu Motors Group websites - https://investors.vertumotors.com
(https://investors.vertumotors.com) / www.vertucareers.com
(http://www.vertucareers.com)

Vertu brand websites - www.vertumotors.com (http://www.vertumotors.com)

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTJIMRTMTTMBBF



            Copyright 2019 Regulatory News Service, all rights reserved