9:33 am, April 6, 2023
Used car supermarket Motorpoint has told the London Stock Exchange profits will likely ‘break even’ in its 2022-23 results – confirming analysts’ predictions.
In a trading update published this morning (Apr 6), the listed company revealed it had generated ‘record’ revenue of circa £1.437bn in the year ended March 31, 2023 – a figure that was up nine per cent on the year before.
Motorpoint Group said the performance was helped by vehicle mix and price inflation, and that its balance sheet remained ‘strong’ with around £5m cash at the year end.
However, despite the booming revenue, the company said its pre-tax profit figure is expected to be ‘broadly break-even’.
That confirms a stockbroker’s forecast published in January, as reported by Car Dealer.
At the time, Zeus Capital’s Mike Allen told investors that Motorpoint faced a series of worrying challenges that would severely affect its profitability.
The investment bank cut its 2023 profit forecasts for Motorpoint from £6.7m to just break-even.
‘We see strong competition and headwinds to profitability and cash generation for the foreseeable future, plus supply challenges in nearly-new vehicles,’ said Allen.
‘We think Motorpoint continues to be relatively overvalued against quoted UK franchised motor retailers.’
In the update, Motorpoint insisted it ‘continues to make strong progress’ on its medium-term growth objectives of more than £1bn in e-commerce sales and over £2bn in total sales.
Moreover, the company confirmed that former Alliant Energy, Sainsbury’s and Argos man Tom Tang had joined Motorpoint as chief technology officer.
His appointment would suggest that Motorpoint is strengthening its online propositions, as Tang is ‘an advocate of the benefits of AI capabilities which benefit the customer and employee, advancing the goals of the business’.
Commenting on the trading update, Motorpoint Group CEO Mark Carpenter said: ‘Whilst the impact of higher interest rates and inflation will continue into FY24, new car registrations rose 18 per cent in March, with the fleet market driving this eighth consecutive month of growth, which will in turn benefit used vehicle supply.
‘This, coupled with continued market share gains and progress on our key initiatives, will enable Motorpoint to emerge from the current environment a highly profitable market leader.’
Motorpoint also announced that it would be opening a new store in Ipswich next month – its 20th site and up from 13 locations three years ago.
